Client and customer debt is a silent strangler, slowly squeezing the life out of far too many companies. From banks to international traders, unpaid invoices can cripple operations, hinder success and threaten your company’s very existence.
Engaging a debt collection agency may seem like an obvious solution. However, their high costs and potential damage to client relationships could leave you hesitating to go that route. Legal representation offers a viable alternative.
Efforts you can make to recover unpaid debt
When considering legal action as a possible way to collect what you are due, ensure you have done all you can to resolve the matter first. Some steps to take before you initiate a formal case include the following:
- Stay proactive: Do not wait until invoices are ancient history to contact debtors.
- Communicate effectively: Call your debtors to remind them of their bills, but maintain professionalism and avoid harassment or threats.
- Formalize payment requests: Formal demand letters carry more weight with debtors than friendly reminders.
- Offer incentives: Consider offering a settlement discount if it does not hurt your bottom line. Sometimes, a little flexibility goes a long way.
These steps encourage payment and lay a crucial foundation for a potential debt collection lawsuit. Courts favor businesses that demonstrate good-faith attempts at recovery before taking legal action.
Legal guidance can be effective in getting debtors to make good on their financial obligations. Often, even the possibility of legal action carries enough weight to show them that you will take the matter as far as necessary to get what you deserve.