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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.
Act Aggressively to Recover Unpaid Business Debts

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.

Client Reviews
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Mr. Cai Is a Diligent Attorney. My sister and I were defendants in a civil litigation case. We hired James Cai and his law firm, SAC Attorneys LLP. Mr. Cai is a diligent attorney and responded to our questions in a timely fashion. He and his staff were very helpful in keeping us informed of the proceedings of the case and in explaining each step. Mr. Cai is also very conscientious of fees and costs, and avoided unnecessary charges. The results of the Summary Adjudication sided with us. The Court Trial resulted in the “Final Statement of Decision” and “Judgment after Court Trial” overwhelmingly siding with us. Cynthia F.
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I Am Truly Impressed. After spending a significant amount of time, money and efforts with my previous counsel at a larger law firm without getting meaningful results, I transferred my employment matter to SAC Attorneys LLP. The attorneys there were able to understand the complex situations of my case and put together an aggressive litigation strategy. We were able to file a compelling complaint within a week and forced the opposing party, which was represented by one of the largest law firms in California, to make a substantial settlement offer shortly thereafter. I am truly impressed by the no nonsense and results oriented approach by SAC Attorneys LLP attorneys. A job well done! X. Gao
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They Took Time to Understand Our Technology. I am the founder of a bioinformatics start-up in the Silicon Valley and chose SAC Attorneys LLP as our corporate counsels. Their attorneys have great experience with high tech start-ups and were able to offer a highly competitive service plan while not sacrificing a bit of their quality of services. They took time to understand our technology and provided value added services by introducing investors and job candidates to us. We regard our attorneys at SAC Attorneys LLP not only as our legal advisors but also our venture partners. Dr. Pete S.