Businesses need revenue. Without it, they fail. Therefore, businesses must not ignore late payments, unpaid invoices, breached contracts and unenforced money judgments. The longer this delinquent debt sits, the harder it is to collect. Many times, businesses fall victim to customer's excuses or they convince themselves they are too busy and simply give up on ever seeing the money. This makes sense to a point--businesses are providing goods and services; they are not debt collectors.
With today's fragile economy and vendors, customers and businesses tightening up, businesses owed money need to now more than ever take an aggressive approach in collecting money owed to them or they will end up the next fatal victim of the currently rough economic times.
A proactive approach must be adopted. When a customer is late on payment, make a friendly phone call or write a reminder letter. Make sure this communication explains your policy on overdue accounts and what steps will be taken if payment is not made promptly.
If the delinquent customer fails to pay and owes a significant amount of money (or owes a large number of smaller invoice amounts), you should consider hiring an attorney to draft a demand letter. This letter should follow all appropriate rules, regulations and guidelines associated with debt collection practices as it relates to the factual nature of the matter as well as the relevant state laws.
If necessary, litigation may follow. On collection matters, many attorneys will agree to represent businesses on a contingency basis. Therefore, the business will typically not come out of pocket to commence litigation. It is very common for delinquent accounts to be paid between the time of a lawsuit being filed and the deadline for the defendant debtor to formally answer the lawsuit.
If litigation results in a judgment, whether on the merits or by default, the judgment is merely a fancy piece of paper worth nothing--unless enforced and collected upon. Griswold Law posted a previous article specifically on judgment enforcement techniques.
Griswold Law assists businesses with the collection of business debts. To schedule a free consultation, please contact Griswold Law.