As a business owner, it can be very frustrating when a company doesn't pay you when they should. In addition, collection of past due bills can be very time consuming! You may want the money, but you need to be careful when you decide that it's time to collect.
With strict laws governing fair debt collection, it’s important to follow certain guidelines before proceeding to collect a past due bill. An overdue debt should be pursued as soon as it becomes overdue to ensure that you get the entire amount. If you fail to collect the past due debt in six months, you will probably end up recovering only half of the amount owed — if that much.
Notify Customers — If all your regular billing attempts have failed, then its about time that you took some serious action. Send a ‘past due' notice to the customer. When doing this, make sure that this notice looks different from the usual bills. When people get into a financial crunch, they choose which debt to clear first, depending on how tolerant a particular company (yours) is about late and missed payments.
Make A Call — Call the customer yourself and make a polite request to clear the overdue payments. Sometimes, this can be the most effective method of recovering an overdue debt. However, according to the Fair Debt Collection act, you are not allowed to call and harass customers at odd hours over the phone. If you feel that your phone call reminder has not been taken seriously, proceed to the next step.
Sending a ‘Ten Day Demand Letter' — This letter will be regarded as an official warning to clear the debt within a period of ten days, after which the debt will be handed over to a professional debt collection agency.
Hiring A Debt Collection Agency — A debt collection agency can be your best bet if all other methods of debt collection have failed. They have the necessary means and influence to coax your delinquent customer to settle at least part of their outstanding bill. They don't bill you until they produce payment.
If you're in business, then collecting overdue debt comes with the territory. Using the steps above can make the process just a little bit easier, in addition to producing faster results.
