If you operate a small business, you may decide to offer credit to some of your customers as part of your trading relationship with them. The majority of customers are likely to pay their debts in a reasonable time-frame, but some may not. When this occurs, you may be tempted to avoid taking action. However, doing so could place you at a disadvantage. Below is a guide to the steps you need to take to recover the money owed to you.
Stop offering goods and services
The first thing you should do is to stop offering any further goods and services until the customer has brought their account with you into good standing. Cutting off the supply of goods and services can prove to be a useful tool which will push a debtor to pay the money they owe.
Send out an invoice reminder and final demand
You should also send out an invoice reminder which clearly states the amount which is outstanding. If you wish to take further action at a later date, it is important that you can prove that the debtor was aware that they owed you money. The aim of the invoice reminder is to encourage the debtor to acknowledge the debt. If they do so, this will extend the statute of limitations on the debt, which will provide you with more time to recover the money owed to you. If this fails, you should instruct a lawyer to help you draft a final demand. The final demand letter will require the debtor to settle the debt immediately or face further action.
Collect any paperwork
You should collect and make copies on any relevant paperwork such as contracts, sales orders, or other correspondence between you and the debtor. This paperwork is important if you wish to take legal proceedings in a small claims court or to instruct debt collectors to recover the money on your behalf. A lawyer will be able to work with a debt collection agency to help to recover your money.
Get professional help
Running a small business, you may know the customer who owes you money very well. This close relationship can make chasing debts difficult, as the line between friendship and business becomes blurred. That is why it is best to call in professional legal and debt recovery services which will be able to collect your money in a cold and detached way.
If you would like further advice, you should contact a legal firm today or click here to learn more about debt collectors.Share