Small Business Collections: How to Get the Money You’re Owed
On average, US small business will see their invoices paid within 23 days of issue.
But a quarter of small business owners have had bad debts that they consider to be completely uncollectible.
Clients not paying their invoices on time is frustrating and can cause havoc with your cash flow. But those that don’t pay at all are actively losing you money.
So read on as we take a look at what your options are when it comes to small business collections.
Offer a Lower Settlement
If you have a client who is refusing to pay, you may be tempted to just write the debt off and move on.
But it may be possible to at least get some of your money back. Try offering to clear the debt for a lower amount. They may be willing to pay 50% or more of the amount owed just to be done with it all.
If you are considering this option, you will need a legal document to show that the debt has been cleared for the lower amount. Speak to an attorney who will be able to draft such a letter.
Use a Collections Agency
If you have tried other avenues to no avail, it may be worth calling in a collections agency.
They will typically take 50% of the amount paid as their fee, but getting half of your money back is better than none. In addition, it takes the stress of dealing with the debt out of your hands. You can leave it to the professionals.
Small Claims Court
If you feel unhappy about only receiving a proportion of the amount owed, you could consider small claims court.
Small claims court will allow you to file a claim up to a set amount, dependant on the state. This can vary from $25,000 in Tennessee to $2,500 in Kentucky and Rhode Island.
If your claim is below the threshold for your state, then small claims court is an inexpensive way of trying to reclaim your money.
File a Lawsuit
If the amount you are chasing is more than your state’s threshold, another option is to file a lawsuit.
You will face much higher court costs than you would with the small claims court. And you will also need to factor in attorney’s fees. But if you are dead set on reclaiming all of your money, this may be the best option.
Make sure you choose a law firm with experience in these types of lawsuits.
Are You Looking for a Law Firm to Help with Small Business Collections?
If you need a law firm to help you with your small business collections then we’re here for you.
Our debt collection attorneys will work hard to make sure we resolve the situation in a timely matter. This may mean sending out letters demanding payment or beginning legal proceedings against the consumer. We have a great deal of experience in this field, and always encourage negotiation over litigation.
Contact us today for your free initial consultation.