Let’s Talk About Business Debt Recovery
Did you know that business debt recovery is different than consumer debt recovery? It is, and many businesses who are owed money don’t understand the one thing that could make or break their collection efforts: communication. Yes, that’s right. The key to collecting on business debt is how well you, or your agent, are able to communicate with the businesses that owe you money. Clients A.R.M. put together this in-depth article on business debt recovery in order to help you have less debt to collect on and to give you the information you need to get the money that you’re owed.
Why Businesses Become Delinquent
There was a lot of talk last year when Hobby Lobby won their lawsuit because it offended a lot of people to think that a corporation is thought of as an individual. While business entities can be formed in a way that affords certain legal rights and protections, there’s one thing that all businesses have in common. They are operated and managed by people. Businesses, despite being a legal entity unto itself, cannot make decisions. People make decisions. Sometimes, those decisions result in problems such as the business becoming delinquent on its payments.
So, the first aspect of business debt recovery is to figure out why the business became delinquent. Since a business is made up and managed by people, we have to look at the three main types of people who are delinquent on their accounts. By doing this, you can learn how to proactively manage their accounts to minimize the risk of delinquency. Then, you can use these three tips we discussed to get them to pay on time.
The first type of person is the person who nitpicks everything in an effort to get a cheaper rate or to totally get out of paying their bills. Yes, they do exist in business. With this person, you must determine if what they complain about is legitimate and deserves merit. You should also have written billing procedures about how to handle these clients and if or when a discount is warranted.
The second type of person owns a business that has too many due dates around the same time of the month. In this instance, you have a couple of options. You can move the due date to a more convenient part of the month. Another option is to provide a small discount if they pay their invoice early or if they provide prepayment. When you work with the client, you’ll become someone that the client will return to over and over again…and you’ll minimize the risk of needing to recovery business debt from that company.
Finally, there are your clients who had a history of paying on time that fall into financial trouble. Again, you have options. You can work with your client to set up a payment plan that enables them to catch up. You can also give them a free financial tool that can help them get the funding they need. Working with your client shows that you value them as people and it also reduces the likelihood that you’ll have to begin collections.
Business Debt Recovery Tips
If you find yourself in need of collections, there are some things that you can do to improve the process and make it more likely that you’ll get paid.
- Begin by calling your customer when their invoice is past due. You don’t have to wait 30 days or longer to collect. The earlier you start, the sooner you can help your client solve any issues that prevent them from paying.
- Stay dedicated. There is a good likelihood that you won’t recover the business debt on your first phone call. Don’t give up.
- Don’t get frustrated and resort to threats. Even if the business acts like there’s nothing you can do, hangs up on you, or acts rude you should remember that you are a professional. You do have the right to collect. However, good customer service and good common legal sense says that you shouldn’t do anything that can be construed as harassment.
- Send out demand letters, too. You don’t have to solely rely on the phone. Make sure that you also send out written demand letters. You should send at least one via certified mail with return receipt requested. This will provide proof that they are aware of the debt.
- Think about hiring professionals to recover the business debt. You can focus on your business and Clients A.R.M. can focus on collecting. You can save up to 40% by partnering with Clients A.R.M. instead of keeping your collections in-house.
You have the right to collect on the money that’s owed to you. Need proactive solutions to reduce the risk of delinquent clients or have questions about collections? Clients A.R.M. would love to hear from you! Click here for help and find out why so many service based businesses love Clients A.R.M.