Collecting Debt from a Business
Are you having hard time in collecting debt from a business? The task of collecting debt from your customers is really difficult if not done properly, so to make your job easy and in a lawful manner here are some tips on how to collect debt from a business efficiently.
Once you have a business, your first priority is to provide high quality products with good services.
However, maintaining the cash flow in your business is highly affected by slow-paying customers and once they refuse to pay it will be a great loss on your profit. This task is really challenging in a sense that there are certain laws governing collection practices and any violation may result to fines and penalties. To help you in performing this job easier, here are some ways on how to collect debt from your customers in a nice manner.
Guide on Collecting Debt from a Business
Collecting debt from a customer cannot be annoying on their part if done in a nice manner. Sending them a simple reminder will be your first option and most often is truly effective to improve your collection. For some reasons, customers failed to pay on time unintentionally or maybe they just forgot the due date of their bill because of their busy schedule. This is also called as “Reminder Invoice”. Just note on the reminder that you haven’t received yet the payment and you’re giving them time to settle. You can also state in the reminder if the payment is still not settled in a timely manner that an interest or late fees will be charged accordingly. This is an effective way to get the attention of the customer and will definitely respond to avoid the extra charges you have cited on the reminder invoice. In legal manners, interests charged on late payments are authorized by law in extent that it will not exceed on the allowable amount so be guided for that reason.
In case that the first option is not effective or the customer failed to respond appropriately then you can send them a formal demand letter. You can warn them that the service will be disconnected or you will take legal action if they continue to ignore your payment request. In other cases, some businesses are hiring a collection agency to the job for them but this action includes legal matters and should be in accordance with state laws. And also, the collection agencies will take percentage on the amount you were owed by the customer upon receiving the collection. You should be careful in selecting a good collection agency and check if there are recent complaints against them that violate the law in collecting debts.
Lastly, your last option is filing a law suit and you can make use of a lawyer to help you out in filing a case.
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