Real World Advice for Collecting Your Company’s Debt

Getting paid for what you do is the lifeblood of your business. But sometimes, you don’t get paid. And while you may not think of yourself as a collation agency, any business that lends money, or has contracts, or waits on payments may find itself in the role of having to collect on unpaid debt.

Practical Tips

There are a lot of laws that say how and when you can collect debt, and violating any one of them can land you in legal trouble. But aside from the legal aspects of staying safe and collecting debt legally, there are some practical guidelines you can use that can generally avoid legal problems when collecting debt.

No Conflicts – You may have a division to collect debt, or just a single employee collecting unpaid debts owed to your business. Either way, it may be a good idea to make sure that whoever is contacting customers or clients to collect debt doesn’t have some personal stake in the collection of that debt. For example, don’t have someone who gets paid commission collecting a debt that the employee will get a commission on.

This tends to encourage employees to do or say anything to collect a debt, and can encourage abusive or coercive debt collection practices.

Have the Info – When consumers or businesses are called about a debt, they may have no idea what you’re talking about. Whether that’s genuine, or just a way to pretend they don’t owe the money, they will ask questions about the debt.

Consumers and debtors are less likely to pay you if your employee doesn’t even know basic information about the debt that is being collected.

Have a system so that whoever is calling to collect the debt can readily answer questions about the account history, why the money is owed, and prior payments. Collectors should have access to as much of the debtor’s account and file as possible before they initiate a collection call.

Have a Designed Person or Team – Don’t just assign collection duties to random employees. Having dedicated collection employees ensures that you can train those employees and that the employees have some knowledge of the accounts, collection laws that may apply, and perhaps even a professional relationship with the people or businesses that may owe your business money.

Stay Calm – Losing your cool, getting insulting or abusive, and threatening or demeaning is the #1 way to make sure that you not only don’t get paid, but that you end up getting sued for harassing debt collection tactics.

Many debtors may act that way to you. Don’t let it affect you and don’t fight abusive behavior with more abusive behavior — as the entity collecting, you’re the one who will look bad.

Record Calls – You may want to consider a system of recording calls (make sure you inform the other side you are doing so). This way, if a consumer or debtor says that they were harassed, you have the evidence to check the validity of what was actually said.

Need to collect on debt or have someone that owes your business money? Call our West Palm Beach commercial litigation attorneys at Pike & Lustig to help you.

Source:

cnb.com/business-banking/insights/accounts-receivable-collection.html