If you run a business and a client or vendor owes you money, collecting that debt is crucial. You might use several methods to do this, depending on factors like the type and size of the debt and the nature of your relationship with the debtor.
Sending a demand letter
In some cases, sending a demand letter or having your attorney send one on your behalf can suffice in prompting parties to pay. This method can be effective when non-payment results from a miscommunication or oversight or when the amount owed is relatively small.
Offering alternatives and adjustments
If maintaining the relationship with the party owing money is a priority, offering alternatives like payment plans can be a practical option. You could also agree to accept less than what the other party owes, which could be better than receiving nothing.
These options can help to collect from parties who cannot pay what they owe in the time they are supposed to pay it.
Hiring a collections agency
Hiring an agency to collect the debt on your behalf can take the job off your plate and give it to someone else. This method can relieve the stress of tracking down debtors and communicating with them to recover debts. Using services that primarily collect commercial debts can also free you from having to understand lawful and responsible debt collection practices.
Hiring an agency will cost you money, but this can be an attractive method if you would rather focus on running your business.
Filing a lawsuit
Filing a lawsuit can be another option for pursuing payments from delinquent parties. Legal action can be the most aggressive option, but it can be the best method in situations involving large sums of debt when the other party has the financial means to pay.
For most small business owners, every dollar counts when it comes to what comes in and leaves the company. These methods can help you get the money owed to you and keep your business running.