Debt collection is a problem that many service oriented businesses will need to deal with. Not only does it take time and money to retrieve the fee that you’re supposedly owed, but it also becomes a legal headache for your business. The worst part is that many businesses will be making mistakes that could ruin their chances at collecting their owed fees.
Debt Collection Mistakes You Need to Avoid
Debt collection mistakes can be incredibly costly for the business making them. You could be losing hundreds or even thousands of dollars each year to these mistakes. So it pays to make sure you know what these mistakes are so you can avoid them.
Not Acting Quick Enough
One of the biggest debt collection mistakes that businesses will make is not acting quick enough. Debt collection cases don’t age like fine wine, instead they age like milk.The longer you wait, the higher the chance that your debtor will run away with your fee scot free. This is because it gives them time to make a plan and excuses that might work in a court of law. So you need to act as fast as possible when you find out that your debtor refuses to pay your fees.
Working With a Client Without a Signed Contract or Personal Guarantee
The first thing that every business should be doing whenever they do business is to make sure your client signs a contract, personal guarantee, or both. Contracts and personal guarantees are the best way to protect your business from non-paying clients. However, what surprises us is that so many business owners forego these two safeguards for whatever reason. This is a gigantic mistake that you could end up regretting in the future.
Cutting Off Communication When Your Debtor Says They Won’t Pay
Communication is key when running a business. You need to communicate with your clients, suppliers and employees effectively if you want to be successful. However, many business owners simply cut off all communications when it comes to dealing with debtors. This is a terrible mistake since it closes the door to a resolution that doesn’t need to involve a court of law.
Speaking Directly to Your Debtor Without a Legal Professional
We mentioned that communication is an essential part of business, including your debt collection efforts. However, unrestricted communication between you and your debtor can also become a problem. This is because of how your debtor can twist your words to their favor. This can cause you to quickly lose your owed fees. Luckily you have the option of hiring a legal professional to become the middleman between you and your debtor.
Legal professionals like lawyers and specialized debt collection companies like Back Door Hire Solutions will have the tools needed to avoid this type of situation. Having a legal expert helping you means that you can stand toe to toe against non-paying debtors, and prevent them from taking advantage of you.
Making mistakes happens all the time when running a business. That much is true. However, there are some mistakes that could severely damage your chances of success. This is the case for debt collection mistakes because you start losing valuable time and money having to deal with this issue, rather than investing that money back into your business. But as long as you know what these mistakes are, you can easily safeguard your business from them.