Tips For Small Business Debt Collection

point that most businesses will avoid doing it whenever they can, or hire an agency to do it for them. But some of the processes still needs to happen in house, and it always helps to know the process and what you should (and shouldn’t) be doing when it comes to chasing overdue payments. So today we have some helpful hints for small business debt collection to share with you.

Avoid Harassment

In general, harassment is a bad thing, and you should avoid harassing the people who owe you money. Not only is it a good customer service policy, but it’s a legal requirement too. If your actions could be considered harassing, then you might end up losing your customer and having a legal case brought against you. So even though you might feel thoroughly frustrated, keep your cool when dealing with overdye customers. If you call, never leave more than one message a day, and never threaten or speak ill of a debtor.

Keep Phone Calls Short

Phone calls are a much more personal and fast way to communicate with you debtors, but they do come with risks. Make sure your calls are on subject, short and formal – now is not the time for a catch up. Be as polite as possible, and make sure the person on the end of the phone isn’t taking the call personally. That means you need to make sure you’re not indicating that the payment failure is a personal failure of theirs. Instead express empathy, be calm, but make sure you’re clear that there is a debt to be paid.

Write Letters

Letters are a crucial stage in the debt collection process, and these should be carefully written. Demand letters should be sent in addition to making phone calls, and should be polite and professional. If you’re not confident writing these letters, you can hire a collection agency to write demand letters for you. This can sometimes be more successful, as the entrance of a third party in the process can be enough to encourage reluctant debtors to pay you.

Offer to Settle for Less

Take stock of your overdue debts, and the reasons your debtors aren’t paying. If you think a debtor would be willing to pay at least some of your invoice, then it is worth reaching out. This is a common strategy to use on customers who have no real hope of paying off the full amount they owe. If you can come to an agreement in the middle, you can at least recover some of the money owed. If this happens, make sure the settlement is made official in a legal document that shows a payment of less than is due that satisfied the entire debt.

Hire a Collection Agency

If you’re really struggling to get a debtor to pay or even respond to you, or you have more debtors than you are able to handle yourself, you can always hire a collections agency like us to help. Debt collectors can take on the communication with debtors and encourage payment, or work with you to move onto the next stages if needed. Debt collection agencies will often charge a percentage of the debt recovered for their fees, but it means you still get something back from the client. Plus they are regulated by the Fair Debt Practices Act, which prohibits actions that may be considered as harassment or fraud.

Take it Further

If all else fails, there is always the legal route. You can file a claim with small claims court. This is generally the arena for small business claims, and because they eliminate the need for attorneys and other higher court fees they are one of the most popular options for small businesses to collect debts. Recent reports show that at least 60% of all small claims filings are by small businesses, and if you aren’t sure how to proceed, a debt collector can help you.

If you’re trying to collect from late (or non) paying clients, it can have a serious impact on your business. Not only does it eat up valuable resources and time, but it can also damage your cash flow moving forward. A debt collection agency can help you tackle debts in an efficient and simple way, giving you access to the money you’re owed and freeing up your time to grow your business. If you would like to know more, just get in touch with the team today.