One of the most common issues that a Newark commercial litigation attorney is contacted about is outstanding debts. Small businesses often struggle with this issue because they often do not have the resources to effectively screen clients or aggressively collect on debts. Many small businesses, however, may benefit from the following advice. These tips may allow the business owner to solve these issues before they escalate. However, it is important to remember that if these tips and tricks do not work, you are still entitled to receive the money for what you provided the client and should seek the advice of a Newark commercial litigation attorney.
The Three Types Of Customers and Their Past Due Bills
It has been the experience of a Newark commercial litigation attorney that customers who do not pay their bills fall under three distinct categories.
- Customers who want to pay their bills, but they are currently suffering financial distress
- Customers that manage their finances by juggling all of their debts
- Customers that will not pay regardless of any situation
If the customer falls within the first two categories, there is hope that the small business will be able to collect on the debt. Working with these customers not only ensures that you receive payments for your goods or services; they may also mean that you have a loyal customer for life. This is especially true for the client who is having a hard time financially. They will be grateful for your help. Or clients that fall within the third category, it is important to recognize the signs that they are not going to pay and take the necessary action to get paid. This may include contacting a collection agency for a smaller debt, or a Newark commercial litigation attorney for a large debt that is hurting your business.
Tips to Remember When You Need to Pursue Collections
- Never harass the person who owes you money. You can effectively collect on a debt without harassing the debtor. In fact, it is against the law to call more than once a day, between certain hours, or to leave messages that are disrespectful, threatening or mean. When collecting on a debt, your Newark commercial litigation attorney recommends leaving a message or speaking to the debtor once a day in a calm manner and in a way that reminds them that you are going to continue to pursue this issue until it is resolved.
- Listen to the client, but never get personal. Keep your calls short and simple and never allow them to get personal. Never discuss what their failure to pay is doing to your company, and never allow yourself to become empathetic to their cause. Listen carefully, make suggestions for repayment, and close the call. That is it. Anything more than that can lead to trouble.
- Be a little creative. If the client truly is experiencing financial difficulty, then you can be a little creative about the repayments. Ask what they can honestly afford to pay you each month and try to resolve the issue. This may help both of you out of a bad situation.
- Write a demand letter. If you find that the phone calls escalate into anger and accomplish nothing, than you should consider a demand letter. Keep copies of everything you send and the dates they are sent for your records.
- Try collection company letters. If you are not comfortable with writing a demand letter, hire a collection agency to do it for you. Many collection agencies offer this service. You do not have to place the actual account in collections to use this service.
- Offer a one-time discount. If you believe that you could settle the debt by making an offer to reduce the debt amount, make the offer. However, make it in writing and stipulate that the debtor only has a limited time to accept this offer. After that time, the debt will revert back to the entire amount that is owed.
- Hire a collection agency. You can turn over the debt to a collection agency. However, it is common for you to only receive 50 percent of what is collected.
Speak to a Newark Commercial Litigation Attorney Today
If you are having problems with collecting debts owed to your company, you are encouraged to speak with the experienced attorneys at Snellings Law, LLC. Our attorneys will review the debts in question and will advise you of the next steps you should take to collect your money. Call 973.265.6100 and schedule an appointment with a Newark commercial litigation attorney today.