Top Three Commercial Debt Collection Obstacles Facing Business Owners

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Business revolves around credit.  It is good business strategy to extend credit to credit-worthy customers.  There are times when this “buy now, pay later” strategy backfires.  Sometimes a debtor cannot pay for the things purchased on credit.  You may not have any other option but to hire someone to collect the money that is owed to you.  It is not always as easy as it may seem to convince someone that he has to pay up.  There are a number of hurdles to cross before a collection agency can mark their account as “account received.”

1.       Excuses From The Debtor

Some debtors are truthful and relay their problem with temporary cash flow to the collection attorney.  Others, however, come up with every excuse under the sun.  Beginning with the often cited “the check is in the mail” to someone in their family died, even if that is not true, it is sometimes impossible for the collection lawyer to tell fact from fiction.

2.       Business Closing

When a business cannot sustain itself any longer, it will have to close.  This is usually at great cost to the owner and his creditors alike.  While this is unfortunate, better business practices would have prevented going into debt collection.

3.       Entering Bankruptcy

Once the debtor is in such dire financial straits that he must file for bankruptcy, all financial obligations are processed by the bankruptcy court.  A collection agency, or collection law firms, will have to turn toward the court to recover as much as possible of the owed debt.

It is usual practice to call a debtor first to remind them of their account in arrears.  A letter referring to debt collection would be the next step.  The last course would be to hire a collection attorney.  When all your efforts do not produce any satisfactory results, you may have to hire a collection law firm to recover your money.  Problems of this nature can often be avoided by a proactive business approach.