Debt collection can be a business’s worst nightmare. It is certainly a problem if you owe the debts, but they can be an even bigger issue if you have clients that owe you. You could be in trouble without even knowing it, so you need to know how to effectively collect your debts.
But how exactly can you do that?
The Best Debt Collection Tips That Every Business Owner Needs to Know
Not every business will be aware of how to deal with clients that refuse to pay their fees. This is especially true if your business doesn’t specialize in providing services, or if you only have a limited understanding of how to deal with them. This is why we’ve made this list of tips and tricks you can use to ensure that you collect any fees that your non-paying clients may owe you.
Never Do Business Without a Signed Contract
Have you ever done business with a client without even making a contract? We’ve certainly seen this happen hundreds of times while helping our own clients. Very few of them ended on a high note due to how essential a contract is to protect your business. There have even been situations where the debtor counter-sued their creditor and won. So you need to make sure that you have a signed contract before you start providing your services or products.
Credit Checks Help You Avoid Problematic Clients
Did you know that there is an easy way to ensure that you can avoid clients that could end up running from their owed fees? That method is by using a credit check to see what is happening behind the closed doors of your potential client.
Credit checks will reveal just how your potential client is paying their other creditors and suppliers. Seeing a number of issues in their payment habits paints a picture of how they’re going to be paying you. This makes it easy to figure out whether to go ahead and work with them, impose more strict terms and conditions, or refuse to work with them altogether.
Personal Guarantees Guarantee You Collect Your Owed Fees
Bankruptcy is an issue that many businesses will have to deal with. However, just like debt, bankruptcy doesn’t just affect the company directly experiencing it. Bankruptcy can also affect a business’s creditors.
Once a business files for bankruptcy, you have a very slim chance of actually getting your owed fees even with a contract. This is because contracts are tied to the business and not the individual who owns it. Personal guarantees help with this issue.
Having a signed personal guarantee means that you can collect your fee from the former owner of the business, regardless of whether the business itself is about to go bankrupt. It allows you to pursue legal action against the individual, and collect your fee through their personal items.
Always Have a Legal Professional or Lawyer Available
A common problem that many business owners tend to have is the fact that they don’t have a legal professional watching their backs. You have to remember that a single word can lead to you losing your owed fees. Having a mediator like a lawyer, a staffing company like staffingdebt.com, or any other legal professional helps you avoid this issue.
Legal professionals will understand just how to sway the court in your favor. They also help you keep equal footing with your debtors’ own team of legal professionals.