Small Business Debt Collection
For the purpose of clarification, when we speak of small business debt collection, this article is for the creditor. It is to highlight the options for a small business to collect their debt cheaply and quickly.
A large debt or several small debts defaulting, can bring a small business to its knees. This is especially true if the debtor goes into bankruptcy, flees, or simply will not pay you.
How To Collect Small Business Debt
Quick and Easy 10 minutes
The quicker you move the better. Get the final demand letter to them and make a deadline
Is There Money?
Does the company have money NOW. Pay me today or tomorrow. If they do not pay you – start step 3. No waiting. Start the clock ticking
Start court proceedings within a maximum of 60 days overdue.
Think out of the box. Maybe there is something in our box.
The great aspect of modern technology is that small businesses can leverage the power of the largest debt collection agencies. But this can only work if the debtor has something to pay with. Many customers suddenly become professional nonpayers by hiding their assets. And with international banking and travel so simple – they can simply transfer cash to anywhere.
So, what are the debt collection options for a small business.
The first step is to send a reminder letter and a final demand. These letters HAVE TO BE followed up with a professional phone call. Your reminder, final demand and call must be within 30 days of payment being due. Either you or a professional must create a small business debt collection letter.
A telephone call should always be preceded by a reminder letter or email. It gives your call “legitimacy”. With over 40 years’ experience we understand that you need to refer to something.
You can do this yourself or have a debt collection agent do it for you. A small business debt collection agent is the better option. However, make sure you understand the fees and commission.
- No emotion. Neither you nor the agent should be angry, sad, or aggressive.
- Debt collection agencies have heard every story in the book. DCA’s deal with this day in and day out. An excuse being only an excuse. It is not a reason for nonpayment. There are no reasons, apart from fraud.
- A collector should remain focused on the debt – nothing else. Not charges nor extra fees. Do not become distracted. Be focused on collecting the debt, first and foremost.
Small Business Debt Collection Outsourced
The step above is reasonably cheap and works quickly. You certainly know if the debtor will pay or not. However, they have not paid you. You really need a professional at this point. There is really only 1 important decision. A debt collection agent near you or near the debtor.
If you search google for business debt collection agent, you will be given millions of results. Literally, millions of pages including some adverts. Here we give you the solution to finding a suitable debt collector. We have used Sydney. You can use your location or the debtor’s location.
This will work for you locally, interstate or internationally. Its is Google, so its free and it is the tool that debt collection agencies use to outsource their assignments.
Simply open google maps. In the top left search box insert the location you require. Once the location has been found you can search the for the service you want, business debt collection, debt attorney or lawyer etc
Your Questions Answered
Why Should I Move Quickly
Generally the sooner the better.
Should I Stop Process With A Promise Of Payment?
Never. The process stops when you are fully paid.
What if Business Is Bust
Write it off and never worry about it. Or chase the business owners, if you believe that is the right thing to do.
Can I Sell My Small Business Debt
Yes. However 2 things to consider. You will not reive the face value of the debt – maybe as little as 10% or less. You can assign the income, but not the responsibilites of any contract – even though they have not paid you. Choose a reputable firm to sell to.
Business Debt Collector Fees
A business debt collector is going to charge you a fee and you have to decide if it is worth it or not. There are many things to consider that only you know. Is it personal or just business? A fee for debt collection to vary from 15% of the debt to far more. You might even lose more money.
Business Debt Collection – The Initial Decision
Genrally speaking if you are trying to collect from a business, the debtor company will know what they are doing. You are not the first to try and collect from them. Have a good, cold look at why you allowed them credit in the first place. Did they accept the terms too quickly? Have you had previous experience? Did they gradually increase their indebtness over time? Was the salesman being paid handsome commisions on the sale and not the payment? Did they have to pay a reasonable deposit? Was the decision made on GUT instinct?
If YOU have failed on making a properly informed decision, the chances of recovering the debt are slim. Before you even commence a debt collection process have someone look at your credit vetting. If you got that wrong, you might learn something. The cost of that decision could be to write off the debt and getting back your your core business.
If it is a large debt, find a professional debt collector. If the debt was small, chalk it up to experience. However do not allow that experience to hinder your business by not allowing credit sales.
Final Decision On Business Debt
Is it all worth it? You might have to invest some cash. Is your time better invested in finding new business? Is your expectations of collecting your debt too ambitious? How long will it take the debtor business to pay you?
However, you do not want to be seen as an easy touch. The word does get out. Although you have to watch your P’s and Q’s because of data protection etc., the debtor can say anything they please. There are solutions to that scenario.
You could choose a commercial collection agency. They specialise in business debt and understand the law. Use our tips on how to find an agent near you or near your debtor. It will save you time and grief. us eth tools the professionals use. They are free!
Sell the debt. There are buyers out there willing to buy distressed business debt. You will receive less than you thought. But it is a relatively low involvement solution.
Resolute Collection Services
If you believe that your debtor is hiding assets you might consider our solutions. Sometimes the unusual works. At the very least, you see something being done.
Comments On Debt Collection
If your business has had a great success with a small business debt, we would love to share it. 5 minutes of your time could save another business from failing.
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