Hello Finance Manager! What are my options for a large past due account?

Hello Finance Manager! What are my options for a large past due account?

Hello Finance Manager! What are my options for a large past due account?

Hello Finance Manager!

I provide sales training to businesses. Sometimes that’s done just by going in and speaking for a day (sort of like a motivational speaker) and other times it looks more like consulting because I’m there with the sales staff for a few weeks. I have a past due invoice for $10,000. What are my options?


Sales in Syracuse

Hi Sales!

Thanks for writing. That’s a lot of money on the line. Before I tell you the options you have for collecting, let me start by saying this. One way to avoid these situations in the future is to put safeguards in place. For instance, you could pick a dollar amount (if many of your invoices are often high dollar) and decide that any invoice that is quoted at that dollar amount (or more) must be paid for in full. Another option is to require a retainer of at least 50% to be paid up front. Both of those options would work fairly well to minimize the number of times that you’re stuck worrying about such a high dollar amount.

Now, let’s look at your collection options.

Small Claims Court

One of the most used phrases in collections? “I’ll sue you!” Yes, small claims court is an option, but there are some things you should know about it. You can read our guide about small claims court, but here’s a shorter version:

There is a limit of recovery in small claims court. To find out the limit of recovery, you have to call your local court. You could also check out their website. If the recovery limit is $5,000 and you’re looking to recover $10,000, you won’t be able to recover the full amount. You can only collect up to the court’s limit.

You don’t need an attorney, but chances are you’ll want one. The upside to having an attorney? You stand a better at chance at recovery. It also helps ensure that all of your documents are correctly drafted. The attorney could also help you prepare a writ of garnishment if the judge allows you to do so (it’s a business debt and not consumer, so things are done a bit different, but it’s all up to your particular jurisdiction). The downside to having an attorney? As you already know, they’re expensive. Of course, they are worth the money, but sometimes when you’re a small entity it may be hard to use that sort of cash in advance.

Hire a Collections Professional

We are assuming that you’ve already attempted to collect the past due amount on your own. Your other option is to hire a collections professional. You might be wondering if the cost of hiring justifies bringing in a professional. The answer is yes. First, it frees up your time. You continue to go out and train organizations to make sales. Clients A.R.M. focuses on recovering your money. Clients A.R.M. can work on a contingency fee basis. This means that we would keep a portion of the money we recover as payment for our services. We have a 99% collections rate!

There are also attorneys who specialize in collections. They do more than sue. First, they actually attempt to collect via demand letters and phone calls. It can be scary to get letters and phone calls from an attorney. So, this form of collections is quite effective. The main issue is that using an attorney for your collections is often more expensive than using Clients A.R.M.

We hope that helps Sales in Syracuse! Give us a call. We’d love to help you. You can also book your free, no-obligation process review. We’ll put our 30 years of experience to work to maximize your accounts receivable. We can even help you with your customer service needs.