When running a business, it’s important to make sure that invoicing and payment processes are as quick and straight-forward as possible. Sometimes businesses can experience customers who aren’t quite as assertive with their payments as hoped. This is why it’s important for you to be aware of what to do if you’re required to recover debts. There are plenty of options for businesses to pursue before turning to the option of taking a customer to court. It’s also equally as important to follow some best practices to ensure that you are following your debt collection process fairly and lawfully.
This may seem obvious. However, it’s often too easy to become irritable and frustrated when you’re having to deal with customers who owe you money. Keeping calm and professional ensures that you are treating your customers fairly, and protecting your business against any potential legal battles. Sending demand letters can often be a good way to make customers pay up, and you can easily write one yourself. The letters should be clear and straight to the point. Outline what your terms are and how the customer hasn’t adhered to them. Make sure that your letters aren’t aggressive or threatening. It’s also a good idea to follow the letter up with a phone call as well if that’s a possible option. Remember to always keep records of all letters sent and notes on the phone calls that you make too.
Contact a Debt Collection Agency
Maybe you’re not comfortable taking up the debts yourself. Or perhaps your efforts aren’t being recognised by the customer that owes you money. If so, getting in touch with a profession debt collector could be a good avenue to pursue. Debt collectors are often able to offer a letter writing service as well if you’re not comfortable doing it yourself. Remember, they are professionals and they know exactly how to handle these situations. They can even provide you with multiple letters that vary in intensity. If the demand letters just aren’t having the desired effect, then once you’re in touch with a debt collection agency, they can be the ones that approach your customers and demand the money they owe. Although this may seem like the easiest option, debt collection agencies often charge quite hefty commissions if they are successful. However, depending on your circumstances, getting something back is better than nothing.
Small Claims Court
If you’re not happy to use a debt collection agency, then you also have the option of filing a lawsuit through a small claims court. This option is a popular one, particularly for small business. Taking your case through a small claims court often doesn’t incur the costs of attorneys and other major court fees. The cost of taking your dispute to a small claims court is relatively low as you put the case forward yourself. Eliminating the need for a solicitor. The fees do differ depending on your circumstances so it’s a good idea to do some research beforehand. Which leads us on to our next point:
Get Professional Advice
Whether you’ve chosen to go with a debt collection agency or through the small claims court, it’s still be a good idea to get some professional advice before you begin. Some solicitors are able to give you advice over the phone and others even offer free initial assessments. So, it’s a good idea to do some research and figure out whether it would be wise to invest in some professional advice. If you’re running a small business and you’ve not had much experience with debt collection, then reaching out to a solicitor could give you a little professional reassurance and help point you in the right direction.
Debt collection can be a long and stressful situation to deal with, particularly for small businesses. But it certainly doesn’t need to be. Making sure that you’re prepared for these types of situations will help you in the long run. Whether or not you’ve had to handle a debt collection before. Define some clear processes for dealing with debt collection and keep them safe. You’ll certainly be glad that you prepared for the situation earlier rather than later.
Struggling to keep up with repayments? Read our informative guide on How to Manage and Reduce Small Business Debt for simple and easy steps to keep your business head above the water.