TRICK or TREAT? Business Owners Beware!
The past four decades have taught me a lot about challenges that businesses encounter. As a business owner from a family of business owners, I learned as I watched my father and brother weather the cash flow roller coaster many businesses face.
This wasn't because their business wasn’t making money, but because clients don’t always pay on time; some never paying debts that they owe. As a business owner or key employee, we often think that because we are smart or have a team of smart people around us—we are doing the right things and making the best decisions. The problem is that we don’t know what we don’t know and that’s where WE CAN TRICK OURSELVES!!
Late or non-paying clients can jeopardize a business! You may mistakenly get angry, complain on social media or to someone who can’t do anything; consider writing off the debts on your tax return—but the truth is that if you earned it, you deserve to get paid! Rather than treat ourselves to qualified advice and help, we often wait and hope it all turns out okay.
Treat yourself and your business to less stress, more money and affordable help by reading the tips below.
Avoid These Debt Collection Pitfalls
Your ability to collect a debt owed to your business hinges on the processes and policies you have in place. You can avoid some of the most common mistakes and improve your chance of successfully collecting a debt by understanding where problems often arise. Your LegalShield provider law firm is ready to help you understand the laws that govern collections, draft letters to debtors and assist you in taking further legal action if necessary. Call your LegalShield provider law firm if you need assistance with a collection matter or have any questions.
- “We didn’t have a payment policy or written contract.” Handshake deals and verbal agreements are difficult to legally enforce. It is essential to have a signed contract for any product or service for which payment will be made at a later date. Your contract or agreement should include a uniform payment policy. Your policy should include exact due dates or a timeline for payment, the name of the individual or business responsible, accepted forms of payment and any potential fees or interest for delinquent payment.
- “Our accounting records are a disaster.” Accurate and detailed records will help you quickly identify and manage delinquent accounts. Your customers and clients should know exactly where their account stands. Provide itemized invoices that include a specific due date for payment. If an account is delinquent, include the total amount owed, the number of days past due, the original due date and any late fees or interest owed.
- "We waited because we didn't want to upset the customer." If a customer's account becomes past due, consider placing a hold on the account and contact the customer. The longer a customer's account is delinquent and the more debt they accrue the more difficult collection becomes. You may have to make the determination to stop providing additional services or products until payment is made. Always remain professional and courteous.
- “We don’t have any documentation but I remember talking to the customer.” Good accounting practices will insure you retain copies of bills and invoices. You must also document your collection efforts. Your records should include letters and emails, as well as the dates and times of any phone calls or meetings. This information will be extremely important if legal action becomes necessary.
- “I was so mad I couldn’t stay calm.” Remain professional and friendly during each interaction with delinquent customers. It is illegal to threaten, harass or intimidate customers who are unable to make payment. Never threaten an action you are not willing or legally allowed to make. Making the issue personal or becoming aggressive will hurt your chances of successfully collecting the debt and could land you in legal trouble.
- “I didn’t really think the attorney could help.” Utilize your LegalShield membership. Call your provider law firm for assistance with collection matters. Your attorney can help you understand the law, draft a collection letter on your behalf, review your contracts and answer other legal questions you may have. If a collection letter does not resolve the matter, your provider law firm will advise you on additional legal remedies available to your business.
The content of this newsletter is intended for general information purposes only, and is not legal advice. Readers should be aware that while certain principles outlined on this site may be similar to principles followed in their own state or province, laws can vary considerably. © Copyright 2013 Pre-Paid Legal Services, Inc. d/b/a LegalShield℠ One Pre-Paid Way, Ada, Oklahoma 74820 www.mylegalshield.com
For a flat monthly cost, LegalShield can help your business with debt collection and much more…
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