Unfortunately, part of operating a business is having some sort of incoming cash flow. That is after all the reason you went into business, isn't it? Get paid by others, so you can pay yourself?
Well, at some point in your business career, you'll have a (or several) client/customer who doesn't intent to pay for your goods or services, despite the benefits they receive. I affectionately call these folks, freeloaders. You know the type, and their delinquent debts bring your business down.
In order to effectively deal with these freeloaders, you must become meticulous and methodical about several things.
First, you must exercise extreme discretion when you work on "credit." Have the potential debtor enter into a contractual security agreement that can protect your interests in the future. Use standardized forms to gather important information such as date of birth, address, alternate addresses, employer, social security number, and basic historical information.
Second, you must have an active plan for handling collection of delinquent accounts. Be careful though, if you're a business owner who hires another firm to collect the delinquent debts, you might need to comply with the Fair Debt Collection Practices Act, even if you're not actively collecting the debt. This Act regulates the ways that you or a third party can handle delinquent debt collection.
Finally, you must know your options. Sometimes, a judgment against your debtor will be your only recourse to collect the debt. The judgment gives you judicial power to garnish paychecks, and bank accounts, and to assess liens against the property. If you're a mechanic or contractor, you may decide to use lien to get your money.
Having a distinct plan will enable you to successfully recover the money you're owed. As always, before you try any of these, you should speak with a competent business debt collection attorney. If you have questions, you can call me at (405) 748-0318 or email me at contact@absolutelawfirm.com.