Collecting on past-due accounts is not one of the most enjoyable aspects of running a business, but it is often a necessary one. You can make positive steps toward this goal (and avoid additional pitfalls) by steering clear of these common mistakes people often make while attempting to collect on a business debt.
Taking too long
The longer a commercial debt remains outstanding, the lower your chances of collecting on it. Many things could happen as months and even years pass by, and few of them benefit the creditor. A business that owes you money could leave the state, file for bankruptcy or simply shut down, frustrating your collection efforts or upending them altogether.
Violating the law
Collecting debts is a highly regulated activity. While commercial debt collection is less heavily regulated than consumer debt collection, you must still avoid overly aggressive and even unlawful tactics that could leave you with legal problems while possibly letting your debtor off the hook.
Setting the wrong tone
Debt collection problems can begin long before an account has gone delinquent. If you fail to establish strong and binding contracts or fail to reinforce with your customers the expectation of prompt payment, a party you do business with may get the message that you are not serious about collecting money that is owed you.
Giving up too soon
It may be tempting to give up on your collection efforts so you can focus on other aspects of running a business, but this can be a mistake. If you sell the debt to a third-party collection agency, you may only receive pennies on the dollar when a much better outcome may be available. If you need help from a debt collection professional, make sure you work with someone who knows the law and has a proven record of success collecting on commercial debts.