When a client owes you money, you will find yourself in a difficult position. On one hand, you do not want to damage the relationship and chance losing future business. On the other hand, your company is taking a financial hit when a client doesn’t pay up. So when do you decide that enough is enough and make the decision to send an account to collections? And, will it be worth it in the long run?
In our thirty plus years of experience dealing with commercial debt collection in Massachusetts, there are steps that one should take prior to sending an account into collections and certain red flags that you shouldn’t ignore.
Step 1: Send an initial payment reminder ten days after terms.
Step 2: Send a second payment reminder at terms plus thirty.
Step 3: Send a final payment reminder at terms plus sixty.
A big, bright red flag is waving when you haven’t heard from your client even after the first payment reminder. But after the third and final payment reminder, you officially have a debtor on your hands. Not to mention, said client more than likely also owes money to other vendors, leaving with you no other option but to turn the account into collections.
On the flip side, if your client is communicating, there may be hope to collect your money and salvage the business relationship, but don’t get too excited (at least not until the check has cleared). If your client promised payment, but failed to do so without explanation, it is as though they never communicated with you. After two or more unfulfilled promises, there is no longer a strong business relationship, only an unfortunate debtor-creditor situation. At this point, you’ve got no choice but to take action.
In the end, after several polite and failed attempts to collect money from a client, you’ve got to protect your best interests and that of the company. That is why seeking the professional services of a debt collection attorney may be your best option in order to collect what is rightly owed to you.
For information on how we can help, please call the office Alan M. Cohen at (508) 620-6900 or email us at email@example.com.