Businesses face unprecedented challenges in today’s environment. There have always been customers who are delinquent on payments, but it is tougher than ever for small and medium-sized businesses to survive when they have a lot of unpaid invoices.
At the same time, business leaders must stay focused on running the company and not spend a lot of time chasing after debtors. Many companies hire a collection agency or a law firm that specializes in collecting debts. If your efforts to collect from a customer who has overdue invoices have not succeeded, it may be time to turn this task over to someone who has a proven track record of successfully collecting money due.
Why collection agencies have the edge
Commercial debts are usually significantly larger than consumer debts. For that reason, taking legal action is an important option and one key reason why enlisting the help of an experienced collections attorney is advisable. Many debtors are used to receiving – and ignoring – letters, emails and phone calls from collection agencies. When the threat of legal action from a legitimate law firm accompanies a request for payment, it often gets otherwise indifferent debtors to stand up and take notice.
Experienced collections lawyers know they don’t always have to file suit against a debtor, but it helps to have that arrow in your quiver. An experienced collections law firm can assess whether the claim is collectible. It’s wise to weigh the cost of litigation against the maximum amount of recovery to determine if a lawsuit is advisable.
An understanding of the law
It’s also wise to work with someone who knows the laws regarding debt collection, and who can ensure that you adhere to those laws. Collection agencies are not authorized to give you legal advice about collection actions you may wish to take. If you negotiate a repayment plan, you will hire a lawyer anyway to draft the agreement. Why not start in the place that you hope to end?
As others have reported, the most expensive scenario is hiring a collections agency that charges fees, but cannot get the job done, and then you seek help from a law firm.