Unpaid customer debt is an unfortunate reality you face as a California business owner.
If you are unsure who to turn to for help, consider this comparison between hiring a collection agency and a commercial collections attorney.
Collection agency methods
Hiring a collection agency is one of the most common approaches to handling outstanding customer debt. However, short of relentlessness, these agencies approach the situation much the same as you would to collect debt. An agency might repeatedly call the customer at home, work or on their cell phone and send numerous debt notices. They may also report the infraction to the credit bureaus and reach out to the debtor’s contacts for more information. Collection agencies generally retain a percentage of the funds recovered as their fee.
Collections attorney resources and tools
While a commercial collections attorney could use the same techniques as a collection agency, most professional collection law firms do not have access to different resources and tools to help pursue the money owed to your business. For example, a professional collections attorney gives personal attention to your case instead of spreading themselves thin over hundreds or thousands of debt collection situations. If persuasive letters from your attorney do not prompt payment, your counsel can pursue legal action against the debtor, which is often necessary to collect from stubborn debtors. Collections attorneys also work on a contingency basis but offer other fee arrangements as well. Significantly, attorneys are governed by strict ethical rules and guidelines.
Collecting customer debt can be overwhelming to a business owner, but it does not have to be. Consider this guide when taking your next steps to pursue payment.