It’s a good rule of thumb that well-run businesses look for like-minded ones when conducting transactions. Regular customers who continually provide or require goods and services likely have a line of credit. Even though they are responsible companies, their credit application should have their bank information and a personal guarantee from the owner. The contract may also outline interest on a balance or late payment and powers to pursue payment. In addition, businesses should always run a regular, routine asset-liability analysis of each and every customer, even if in good standing. Failure to agree to these terms is a red flag, at least for initially extending credit.
Addressing outstanding accounts
Assuming the above was done, businesses owed money can begin with the following steps to remedy the situation before initiating legal action:
Send invoices on time: These should be accurate, easy to read, and contain information on how to pay at least the minimum amount.
Communicate with them: Start by sending a formal letter that their payment is overdue without using overtly threatening language. State the facts and then follow up via telephone, email, or in person. Propose solutions that achieve your goal of getting paid without tainting the business relationship. An attorney can help negotiate a payment plan if the client is open to it.
Weigh legal options: If the client is unresponsive or shows no signs of paying, the business owner needs to weigh their legal options to pursue a judgment against a debtor who owes money. They can do some research on their choices.
The best option
Attorneys who handle business collections know effective strategies for meeting the client’s goals. These legal professionals can do in-depth research and asset-liability analysis to create a plan for the client. It can involve a wide range of actions that comply with the Fair Debt Collections Practices Act and California’s Rosenthal Act. If litigation is the best option, the attorneys can also handle this, leaving the client to focus on running their business.