If you have a debt owed by a company much larger than yourself, you may feel as if you’re trapped in a David versus Goliath situation. This is especially true for small businesses, as such debt for non-payment is one of the main reasons small businesses end up having to go out of business. Thankfully, we’ve got some incredibly helpful tips that will give you the courage to lessen the late payment damage that is owed for your hard work – or possibly expect when a customer plans to not pay you for your services.
So if you can hone your communication skills effectively, it’s possible to detect such clients who plan on splitting before paying the tab or detect an issue before it swallows your business whole.
Common Late Payments from Clients & Customers
As far as determining how a small business collects a debt owed, the circumstance must fall into one of these categories:
– A client or customer who cannot pay due to financial strain.
– A client or customer who has several payments owed, but with pay them in no particular order.
– A client or customer who refuses to pay for service at any length.
Now if a client or customer falls into the first two categories, it’s possible that they can still be worked with since they have made payments for your service. So if you’re a small business owner, it’s important to have a strategy in place that keeps clients and customers out of the third category of non-payment clientele. This means that you’ll want to act fast with the kind of customer who refuses to pay for services.
Acting Quick & Staying Determined
As for small businesses and debt collection, the general rule should be acting quickly and remaining determined. Regardless of the client or customer who isn’t paying their tab, staying determined will allow you to get paid entirely and acting quickly will allow you to maintain your right to get paid. A reminder or a bill should be sent as soon as possible, as a bill or reminder for payment being sent at the end of the month can be misconstrued as a weakness of your business if a payment hasn’t been made. That’s right, the moment a payment is due, a bill or reminder should be sent out immediately.
The Fair Debt Collection Practices Act
As far as collection agencies, they are regulated through what is known as the Fair Debt Collection Practices Act. This act is what prohibits actions that can be considered as fraud or harassment. So to not go beyond legal boundaries, it’s important to understand these tips so you can collect debts and not step on anyone’s toes:
– Don’t Harass – If someone owes you money, it’s important to not harass them. In addition to being a great policy for customer service, it’s a fantastic legal policy. If your actions can be deemed as harassment, it’s likely that you’ll lose a customer and face legal difficulty. For example: If you’re calling regarding an owed debt, do not leave more than a single message every day and do not speak ill of the individual who owes you money.
– Short & Sweet Calls – Keep all debt calls formal and short. Do not allow the calls to be taken as personal attacks or misconstrued as a personal failure. Remain calm throughout the conversation, but make clear that the debt needs to be paid.
– Letter Communication – Letters written to clients and customers who owe you money are known as demand letters. In addition to making calls, it’s important to send letters too. Make sure copies are made of each letter in the event you must reach out to a law firm.
– Settle For Less – If there’s no chance to recieve all losses, settling for less might be an option.
– Small Claims Court – Depending on where you live, small claims court may be an option.
– File A Lawsuit – If all else fails, one can opt for filing a lawsuit.
Considering the information above, there’s plenty of ways a business can collect debts owed. As a firm that focuses on B2B debt collection, contact us today so we can get you paid for services performed.