Debt Collection Advice

Does someone owe you money?

It is a very common experience, particular in small business where you are owed money by a key customer. Sometimes you have started out with a very good relationship with them and started to do a lot of work for them by embarking on a big project or task. Then suddenly the situation changes. They realise that they either don’t want to pay or can’t half way through a project and then they start trying to get out of paying you for the work that you have already done. Now they are a bad customer because you have invested a lot of time and energy in getting a product to them which they will no longer pay for.

What do you do?

It really depends a lot on your personal situation and the amount of money you are owed, how long the debt has been outstanding and whether you know the debt can be paid back. But there are some simple steps you can take to ensure that you will not be exposed to the risk of unpaid invoices or half fufilled contracts.

Step 1 – Send a Debt Collection Letter (A letter of Demand)
However, if you realise that a debt is owed and the person simply will not pay, the first step in any debt collection process is to send a debt collection letter, otherwise known as a letter of demand. This is a very simple, cheap and quick measure which has a high rate of success for collecting debts. A letter of demand will simply outline the amount owing, give a time frame for repayment and an ultimatum that if payment is not made in the immediate future, there will be consequences. You can buy a debt collection letter to send to someone by clicking on the link below.

Step 2 – Seek Legal Advice
If this doesn’t work, your debt collection matter will essentially become a matter for a lawyer because you will need to sue the debtor to recover the money. There could also be further debt recovery litigation which results from obtaining an initial order. You should seek legal advice about this if you get to a point where the debt recovery is necessary through legal channels.

Step 3 – Prevent Debts from being Uncollectable
When you set up the transactions that take place in your business, you may look into the possibility of taking cash upfront, a deposit or an escrow system. This is particularly true when you have a large transaction to organise. Although you may have some concerns about a deposit or escrow system reducing sales up front, it will protect you from non-payment much better than after the event type actions.

Debt Collection Letter Resources