When it comes to commercial collections, there's one main rule that you should follow. And that rule is to do it now (or, as the famous slogan goes: Just Do It!). In other words, don't wait to collect on past due accounts. Here's why.
Older Accounts Are Harder to Collect
The longer that an account is past due, the harder it is to collect on. This can be because of any number of reasons. For example, the business could close down. They may file bankruptcy. You could lose important documentation that validates the debt - and that documentation is key because if the debtor requests debt validation, you must provide it in order to continue your collection efforts. You also need the documentation if you want to pursue other collection options such as suing the debtor. Even if you have the documentation, getting a judgment is one thing. Yet, being able to enforce the judgment without the assistance of a skilled collections attorney may be another problem altogether when a debt is extremely old.
You Must Abide by the Statute of Limitations
Commercial collections activity is subject to a statute of limitations. This is a time period set up by law that gives you a certain amount of time to attempt to collect on the debt. Once the debt is outside of the time, it can be close to impossible to collect on unless you're able to toll the SOL with the assistance of a knowledgeable collections attorney.
If a Debt Is Old, Should You Just Write It Off?
Because collecting on a commercial debt gets more difficult with time, you may be wondering if you should just write it off. The answer is it depends. First, you have to determine if the money that is owed to you is a significant amount that warrants you trying other avenues to collect on the debt. Working with a commercial collections lawyer is an added expense that may or may not be justified based on the amount that is owed to you. However, lawyers do often have additional ways that they can use to try to get you paid. And in many cases, some money is better than no money. Writing off the debt should be your last option.
For more information on the collections process, contact attorney Ronald P. Slates today.