New business debt collection may be the last thing on your mind as you juggle all the different moving parts the come with starting a business. But it can be a deciding factor if your business is to survive and thrive.
If you are in the process of starting a new business, debt collection on past due accounts is likely not even on your radar yet. However, establishing a process on how to collect debt is a crucial component of any business – no matter what the age. Here are a few of the myths that new (and not so new) business owners should dispel when it comes to new business debt collection.
Myth No. 1: I Will Lose Customers If I Push Too Hard to Collect
Collecting on an owed debt through letters, email, and phone calls is an appropriate course of action as a part of doing business. Promptly informing the individual through email or letter on the day the debt is past due is a first step. You can then follow up with periodic phone calls and emails that remind them how many days they are past due. You will want to document each step of the process as it will help your case if you enlist the services of debt collection attorney. The important thing to consider is that you choose a means of debt collection that is legal and professional.
Myth No. 2: Only Large Companies Use Professional Debt Collection
Tens of thousands of small and medium-sized businesses rely on professional debt collection every year. Whether the debts are a few hundred dollars or tens of thousands, new business debt collection processes help countless companies recover debt in a timely manner.
Myth No 3: If I Can Not Collect the Debt Myself, the Debtor Will Not Pay
It is certainly prudent to try to collect debt on your own for a period of time. However, after several rounds of emails, phone calls, and strongly worded letters, it’s time to turn the task over to a debt collection attorney. After 90 days of trying to resolve the situation, you have exhausted what you can do to collect on the debt.
Myth No. 4: Debt Collection is Too Expensive
There is a cost for enlisting the help of experienced debt collection attorneys to collect on debts. However, the cost of not collecting on debts is much higher and can impact the amount of money you have on hand for day-to-day operations. When you work with a debt collection attorney, the majority of funds collected still end up back in your ledger.
Myth No. 5: Debt Collectors Hound Debtors and Make Threats
Debt collection is governed by the Fair Debt Collection Practices Act, which has specific guidelines for contacting debtors. For example, a debtor can request not to be contacted at work. In addition, individuals cannot be contacted before 8 a.m. or after 9 p.m.
Correspondence from a collection agency often end up in the trash unread, but a letter from a debt collection attorney is more likely to prompt action by the debtor. The average consumer is far more likely to be responsive when contacted by a lawyer than by a collection agency. Debt collection attorneys have procedures – including wage garnishments, property foreclosures, and bank levies – that can be utilized to collect on unpaid debt. Most of the time mentioning these possibilities is enough to convince the debtor to pay. However, if they choose to ignore the potential consequences, an attorney can follow through with these legal procedures in order to recoup the money you are owed.
If you are struggling with new business debt collection and want to know more about how to collect debt, contact McHughes Law Firm today at (877) 750-6173 to schedule your free legal consultation.