Improving Your Chances of Collecting Commercial Debt
Business processes vary significantly between different Industries, but many businesses that sell to other companies will need to extend credit tho their customers. Whenever a company Loans money to another business there is a risk that they will be unable to recover payment from their customer. While a certain amount of bad debt is inevitable for a businesses, addressing those customers that don't pay outstanding debt quickly will improve on the chances of receiving payment. Here is what you should do when a commercial customer indicates it is unlikely to pay their debt.
Try to Address the Debt with the Customer
The first step should be to contact the customer regarding the outstanding debt and see what is leading to their non payment. Sometimes there is a small disagreement on the invoice that needs to be remedied, while other times there is a more critical disagreement on the quality of the service or product that was delivered. Contacting and reminding the customer about the contract and their obligations often improves on the collection process. This should be your first step.
Reach out to a Legal Expert
Some companies won't pay their outstanding debts unless you take or threaten legal action against them. Use an internal lawyer to contact the customer first and threaten legal action. If this is not successful send a formal letter and, if needed, then file a formal lawsuit. This can be expensive so it is not always advisable to do so, but if not report them to a credit agency and avoid doing business with them in the future. You can also explore the option of selling your outstanding receivable to a third party collection agency for a percentage of the balance which can help you recover a portion of the amount owed to your firm. To learn more about Commercial Debt Recovery come visit our site.
