Commercial debt collection: Increasing the odds of getting paid

Commercial debt collection: Increasing the odds of getting paid

| Nov 9, 2020 | Collections

California small business owners have encountered some unexpected obstacles in the last few months that make receiving payment from those they have contracts with vital for the survival of the venture. Commercial debt collection had its challenges prior to recent events, but now it can be even more problematic. Even so, there may be ways to help increase the odds of receiving payment from another company.

The following tips could help when trying to receive payment from another California small business:

  • Companies are still made up of people, and the business collecting the debt sets the tone from the beginning. Remaining calm and business-like instead of starting conversations with an aggressive tone could keep the other party from digging in his or her heels and refusing to pay out of anger or spite.
  • In keeping with the above, harassing the other party for payment could only cause the other party to stubbornly avoid payment just to “get back at” the other party for the harassment.
  • Before embarking on any debt collection, it would be a good idea to gain an understanding of the company’s rights and responsibilities. Failing to comply with federal and state laws regarding this particular area of law could result in violations and not receiving monies owed.
  • Keep meticulous notes and documentation regarding collection efforts. Beginning with the first invoice through any collection efforts, take the view that it will be necessary to provide a court with evidence of the efforts made to collect the debt and its validity.

Depending on the circumstances, it may be necessary to negotiate a settlement for less than the total amount of the debt. In some cases, this may be a better outcome than continuing to pursue full payment. For instance, the other business may have financial issues that could result in a bankruptcy or closure or both. It might be better to accept some payment rather than no payment at all.

The other thing to consider is that even though there is often a similar progression of events, there is plenty of room for creative solutions to satisfactorily resolve the issue. In order to know what the best way forward would be, a small business owner could consult with an attorney experienced in commercial debt collection. This can be a tricky area of law to navigate and having a knowledgeable advocate would certainly help.