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How to Make Sure Your Customers Pay Your Business

Lucere Legal helps small business owners with debt collecting
Categories: Collections

Sooner or later, you are going to have someone who doesn’t pay you for the services or products your business provided.  Deadbeat customers are a fact of life for every business, but you are not without recourse.  Want to know your alternatives?  Here are some options:

In-house collections – You can designate someone in your company to contact the buyer personally to see if the invoice was lost, or if there were other reasons for nonpayment. Often these conversations are a good opportunity to learn about what you can do better as far as product or service delivery. Also, many times you and the customer can work something out.

Attorney – An experienced business lawyer can help you collect if your own efforts have failed.  Sometimes all it takes is a well-crafted letter on attorney letterhead to get action.

Collection agency – You won’t recover the full amount – a collection agency generally takes 25-40% of a collection – but sometimes something is better than nothing.

Small claims court – In Minnesota, small claims court is called Conciliation Court and you can bring a suit there for disputes involving $15,000 or less. This will take more of your time than money, but could pay off.

Tax write-off – You may be able to take a bad business debt deduction if all your collection efforts have failed.

If you find yourself getting stuck with lingering accounts receivable on a regular basis, you very likely need to review your invoicing practices.  We can help you with that.

You may also consider rethinking when you take payments in your process. Requiring payment upfront or partial deposits can help with both cash flow and weeding out people who do not really have the means (or possibly integrity) to pay you.

If you are still sending out paper invoices, consider sending a second invoice by email, and be proactive about following up promptly once a payment is late.

We proactively monitor and review these kinds of matters for our clients.  Let us know if we can do this for you.

A comprehensive asset protection plan for both your business and personal assets is a must for any business owner.  If you’re a small or mid-size business owner, call us at (612) 206-3701 or fill out our contact form today to schedule a business consultation session.

Image courtesy of adamr / FreeDigitalPhotos.net

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