Your business or lending institution provides capital to businesses that need it. Ideally, this allows them to distribute the goods and services their customers are looking for, and they can pay the money back — with interest.
As you well know, though, some businesses make it very hard to collect. They don’t pay on time, they’re difficult to get in touch with, and some of them just fail to pay their debts off entirely. Why does this happen?
The business itself is failing
In the first five years, about half of all businesses fail. This can be due to a lack of customers, an inferior product, a poor business plan and many other reasons. When the company is heading toward a shutdown, owners may neglect to pay what they owe, try to put off the payments in hopes that they can turn things around, or just not have the resources to pay even if they wanted to.
The business hasn’t been paid properly
Another serious issue is when the business itself is waiting for payment. Say you loaned money to a construction company. They did a job, but the new homeowner hasn’t paid them yet. If they struggle to collect, so do you.
The market changes
Changes in the market can come from numerous sources. A recession could make it so potential customers can’t afford goods and services, for instance. A new competitor could come in and steal the customer base. A certain product may simply go out of style. If the owner didn’t analyze the market properly, their investment wouldn’t pay off, and they won’t pay you back.
If you are experiencing any of these issues and you need to collect, it is imperative that you understand exactly what options you have. Experienced counsel from a team that has done this numerous times may help you navigate this complicated process.