Explaining the Commercial Collections Process

Explaining the Commercial Collections Process

On Behalf of | Jul 13, 2017 | Commercial Collection

Although a past due commercial account will have its own associated facts that may cause you to create a specific commercial collections plan for it, it is helpful for business owners to understand the collections process. Keep in mind that throughout the entire commercial collections process that you should learn as much as you can about the business and its state in order to determine whether the debt is collectible (or remains collectible). If you have questions about the commercial collections process or want to learn about your legal rights, you should speak with a licensed commercial collections attorney in Los Angeles.

Reminder Phone Calls for New Clients or Large Accounts

Around 15 days after you’ve sent out an invoice to a new client or to a large account, you may want to make a courteous reminder phone call. This is important regardless of whether you provide goods or services. If you’ve shipped goods, you should make sure that they were received. If you provided services, this is a good time to make sure that the client is happy. Ensuring that products are received and that clients are happy are two of the best ways that you can reduce the likelihood of the account being past due during this cycle.

5 Days Past the Due Date – Mail a Reminder Letter

If an account goes five days past the due date, make a courtesy reminder call. If payment is not issued over the phone, send a reminder letter. Both the call and the letter are important because it gives the client the opportunity to ask questions and for you to clear up any billing and payment issues that may exist at this point. If you have multiple payment methods, make sure that your clients know about them.

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45 Days Past the Due Date – Second Reminder Letter

For smaller commercial accounts, you may wait until this point to send your first reminder letter. However, it can be convenient to have a commercial collections process that is applied across the board. Make sure that you also call the client again in addition to mailing the letter. Phone contact at 45 days past due is generally better for procuring payment or a promise to pay (and remember to follow up on that promise) than a letter.

60 Days Past the Due Date – Notice of Terminating Credit Line and Account

At two months past due, you should issue a written notice informing the client that you are terminating their credit line and closing their account. Include a demand for payment and let them know how they may pay their account off.

90 Days Past the Due Date – Issue the Final Demand Letter

At three months past due, you should issue your final demand letter for payment. If you’ve not been paid after 90 days, you should look into your legal options for commercial collections because the debt is now considered bad business debt.

For more information on the collections process, including to discuss whether you need to retain he assistance of an attorney with proven success collecting judgments, contact collection attorney Ronald P. Slates today.