In a perfect world, every client you work with would uphold the payment agreement arranged in exchange for your products or services. Unfortunately, this rarely happens, and you must be prepared to mitigate your losses from those who don’t pay on time or refuse to pay at all. If your business’s cash flow is interrupted even slightly, it can prevent your operations from running smoothly and make it hard to keep up in a competitive market. This is especially true when your debt collection attempts involve another business, as B2B invoices are often larger than the ones owed by individual consumers. Here are a few ways to make sure your clients pay their debts.
How to Facilitate B2B Debt Collection
Clearly Communicate Payment Terms
Before providing your products or services, it’s important to establish the terms of payment and ensure your clients are aware of what these are, as well as what will happen if they don’t pay. Your expectations can be outlined on a credit application, order form, or contract. These forms should clearly state when payment is due, the interest rate that will apply if the payment is late, and your intent to use debt collection services if necessary. Oftentimes, this is enough to hinder clients from becoming delinquent on their invoices.
Send a Demand Letter
You may come across clients who are comfortable carrying debt and aren’t bothered knowing they are breaching your payment agreement. If you haven’t gotten a response after reaching out with a friendly reminder, the next step is to send a demand letter. You may send this directly, but many business owners receive better results if the letter is received from a collection agency. It should include how much debt is owed, the original due date, an opportunity to deny the debt, and alternative solutions for resolving the debt.
Use Investigative Tactics
If the debtor still fails to meet their financial obligations, a debt collection agency can use an array of investigative tactics to track down their location or uncover hidden assets. Commercial debtors are not protected by the Fair Debt Collection Practices Act in the same manner consumer debtors are, and collectors can find ways to compensate business creditors.
File a Debt Recovery Lawsuit
If all your attempts to collect on a B2B debt prove unsuccessful, you may opt to file a debt recovery lawsuit against your client. You will need to present a strong case to the court with sufficient evidence that shows the debt claim is valid and accurate. This may include a signed payment contract, purchase orders, and emails that admit payment is owed.
B2B debts can put the future success of your business in jeopardy. Working with a collection agency, such as Joseph, Mann & Creed, will help simplify the process of pursuing payment and allow you to remain focused on the day-to-day operations of your company. Since 2001, they’ve provided business owners throughout the Twinsburg, OH, area with professional and efficient debt collection services. Their expertise in the industry makes them the ideal partner to optimize your accounts receivable. Call (216) 588-9923 to schedule an appointment, or visit their website for more information on how they can assist in your recovery efforts.