Legal Strategies for Commercial Debt Collection
If your body’s blood flow is obstructed, you can die. Likewise, without good cash flow, your business can die. This is no exaggeration, particularly for tech start-ups and other young businesses. No matter how hard your sales team and operations staff work, if your customers are not paying you in a timely manner, you will soon have a deadly serious cash flow problem.
If you are lucky, most of your customers are good payers, and friendly reminders are all that is needed to collect on debts owed to your business. But what if you have a debtor who becomes deliberately evasive over a lengthy period of time? Or what if a customer withholds payment due to a contract dispute, or someone you have sued has fraudulently transferred assets in order to become judgment-proof? In such difficult situations, there are a variety of ways in which an experienced commercial debt collections attorney can help.Proactively Avoid Commercial Collections Problems
The ideal solution is to deal with your business’s debt collection proactively. Collections experts recommend the following:
- Keep good records. Missing records—such as contracts and delivery confirmations—present one of the greatest barriers to debt collection. Ironically, a business’s decision to control costs by limiting administrative staffing is often the root cause of poor record-keeping and loss of income.
- Write a specific collections policy. Debt collection experts advise that the most important thing businesses can do to avoid collections issues is to establish a clear credit and collections policy and strictly enforce it.
- React more quickly to late payments. Many companies allow receivables to age to at least 60 days and do not issue final demands until 90, 120, or even 180 days. The problem is, the older the account, the less likely it will be collected in full. For net 30 contracts, experts recommend sending accounts to collection at 60 to 90 days.
Depending on the type of debt to be collected, debt collection attorneys have many tools at their disposal.
A demand letter is typically the first step. Receiving an authoritative letter from a law firm is often sufficient motivation for a debtor to pay up, so as to avoid ending up in court.
Face-to-face meetings and settlement negotiations are another step. Preparation is as key to negotiated settlements as it is to litigation in court. An experienced collections attorney will have the tools and expertise to conduct financial research on the debtor, disclose bank accounts and other assets such as real estate holdings, and trace assets the debtor may be trying to hide.
If an out-of-court settlement cannot be reached, litigation may be necessary. This typically involves filing an action in civil court seeking a judgment against the debtor to force payment. But the attorney’s work does not end with winning in court. The money awarded must still be collected. Attorneys can seek to enforce court judgments by means of property liens, wage garnishments, bank levies, and property foreclosures.Get Help From an Aggressive San Jose Debt Collection Attorney
Does your business need help collecting large overdue debts? An experienced Silicon Valley debt collection attorney can help, whether those unpaid debts stem from accounts receivable, the sale of goods or services, real estate rental payments, or a judgment or settlement from civil litigation. To schedule a consultation, call SAC Attorneys LLP at (408) 436-0789.