A business cannot survive without a constant flow of capital. You and your team may be doing everything right, but if your customers are not paying you what they owe, things can get problematic very fast.
In an ideal world, your clients pay in full, on time, with little more prodding than a polite request. However, sometimes other parties may deliberately withhold payment for any number of reasons. Perhaps there is a dispute over the terms of a contract, or maybe they think they can get away without paying what they owe. Regardless of the situation, it’s essential to take steps to help address commercial debt collection issues.
Take a proactive approach
It’s vital to be proactive when it comes to commercial debt collection. Businesses should, at a minimum:
- Have customers sign purchase and/or credit agreements that permit the recovery of interest on overdue payments and attorney fees if collection efforts are required.
- Keep detailed records allowing you to prove that purchases and deliveries were actually made.
- Create a specific collections policy to enhance the effectiveness of collection efforts.
- Be creative when making demands for payment. Getting the customer to admit the debt in writing in return for a payment plan can be very useful down the road if litigation becomes necessary.
If a customer is particularly stubborn, you have some tools at your disposal to help compel payment. Having an attorney draft a demand letter can sometimes be enough to push a client into action. If demand letters fail to work, you can request a face-to-face meeting in an effort to reach an agreement. Settlement negotiations are also a potential option.
When all else fails, you can attempt to collect by taking civil litigation action. A court judgment may be enforced in several ways, including through liens, wage garnishment, and property foreclosure. It would be best if you took the time to discuss all of your commercial debt collection options with a skilled professional.