If you provide your services or goods to another business, you will, at some point, experience the stress and anxiety associated with past due accounts. It's something that all businesses experience. When businesses don't pay, you may choose to assert your legal rights during the commercial collections process. If you're unfamiliar with the commercial collections process, you'll want to read this post and bookmark it for future reference.
What Is the Commercial Collections Process?
'Commercial collections' is the term that is used to reference the act of seeking to collect payment owed to you from a business with a past due account. The process of commercial collections can begin as soon as you recognize certain signs that a business may not be willing or able to pay their invoice.
As a business, you should have a collections timeline. However, merely creating a collections timeline isn't enough. An experienced collections attorney can help you create a plan of action that you and your finance team can stick to in order to maximize the likelihood of receiving payment. For example, at 30 days past due, your business should issue a reminder letter about the past due invoice. Calling the past due business may also be helpful. At 45 days past due, you should consider sending out a second demand letter along with making a follow up call. Between 55 and 65 days past due, the account should be closed. This is the time to consider sending out a termination of account letter and including a demand for the past due amount. At 80 days past due, you should make a final call to collect. At 90 days past due, you should send out your final demand letter before turning over the account to a commercial collections expert. Questions about how all of this should look? Your collections attorney will be able to answer them for you, and prepare you for what could be in store.
What If the Client Asks for Verification of Debt?
If the client disputes a past due invoice, they may request that you provide verification of the debt. Although debt verification is often only a duty that is required of debt collection companies, it is still a prudent practice. Provide the client with a copy of the past due invoice that shows the past due amount, describes the services rendered, and something that shows when the last payment was made on the named account. Remember to send copies and not your original files. You may opt to send digital files through email (if the past due client agrees to this arrangement), via fax, or via certified mail with return receipt requested.
What Are Your Options for Commercial Debt Collections?
Of course, most businesses begin by attempting to collect on the debt through phone calls and demand letters. However, if this method fails, and it often does, you do have other - stronger -- options. One such alternative is to work with a commercial debt collection agency. Be aware that while these agencies may collect on your behalf, they often charge you a fee for recovery. Another second option is to sell the debt to a commercial collections agency. You likely will not receive the entirety of what is owed to you, but it does mean you get to close out the account faster, if not at a discount. Lastly, and perhaps most effectively, you have the option of pursuing the matter in court. A qualified commercial collections attorney can help you through the legal process and can explain which legal remedies may be the best options for you to pursue against the past due account holder.
The Bottom Line
Our clients, businesses, asset-based lenders, bankers, etc... always have an eye on the bottom line. Time is money. Past-due accounts can cause business interests and profits to suffer. For more information on how to collect a debt that is owed to you, contact the commercial collections attorney that other attorneys fear - Ronald P. Slates, today.