If you operate a business, you will eventually not get paid for goods or services that you have provided. An employee or the business might have borrowed money and you probably won’t get it back. A passive approach is not the answer. Find out what you can do to recover your money!
You have to do the collection if your customer owes you money. Outstanding payments don’t get better as time goes by. The more time you wait to collect your money, the more difficult it will be to collect all or most of what is owed to you.
Collection activities consist of:
- In-house efforts. The non-payer has to be contacted by an employee representing the company. Perhaps the invoice wasn’t received. They might only need a bit more time to repay the money. You might even offer easier terms for them to repay the money owing.
- Small claims court suit. Should the amount owing be under the small claims court limit, it is a quick and easy process to proceed against the non-payer. A lawyer isn’t a requirement and procedures in small claims court are comparatively inexpensive. For instance, you provided your photography services at a wedding; however, the couple didn’t like the photos and are refusing to pay you. Once you have carried out your contract to take a specific amount of photos and they are not blurry or “bad” in any other way, you will most likely win your case once it is presented to a judge.
- Attorneys. If you aren’t satisfied with the outcome, a lawyer might be able to help you. The lawyer will mail a letter to the non-payer requesting payment immediately and if payment isn’t made they will pursue it vigorously.
- Collection agencies. A collection agency is an alternative to using a lawyer. If you go this route, you will never get the full amount owing. The agency usually takes between 25% and 40% of what they collect. For example, suppose you are owed $1,000 and the agreement you made will give the agency 25% of what they collect. Say they eventually recover $600 that means you will only get $450. Getting anything is better than zero and you can focus on your business and let the collections experts do their job.
- Check out the reputation of the collection agency by looking at the Better Business Bureau.