June 1, 2015
How to collect overdue accounts and avoid legal action
You’ve done the work – now you want to be paid. The last thing you need is to get caught up in legal action to recover your money.
You wait for payment – silence breeds fear – your frustration builds as payment of your account does not materialise.
The reality is the next phase – you might never get paid for the good work that you have done.
So you need to decide what you want to do – what action will you take? Do you need to consider legal action? Collecting your overdue accounts may be a novelty at first but once the novelty wears off – what is your strategy?
You’ve qualified your client – you have disposed of the client types you don’t want – but in the end, your business, like any other business, will have some bad payers. So consider how to approach the collection of overdue accounts in the context of the allocation of reasonable time limits so that your precious time is not entirely dedicated to chasing unpaid accounts.
So what are the practical steps you can take to collect your overdue accounts?
Your options; lengthy and possibly costly legal action or use a legally based Debt Collection Letter series.
First let’s identify ‘why you aren’t getting paid’.
Non-paying clients will fall into 1 of 3 categories.
- he doesn’t have the money right now
- he isn’t happy with your product or service and refuses to pay
- he has spent the money elsewhere
Understanding which of the categories the non-paying client falls into will be key to the successful recovery of the money owed to you.
Speak to your client if you see the value in this approach. Don’t be afraid to take the first step and call the client to ask why your account has not been paid.
Reminders are OK but are quickly put to one side. Calling to speak to your client and putting him ‘on the spot’ will require your client to provide answers or hopefully to make a commitment to pay the account.
Now you have identified which category your non-paying client belongs too! After you have made that important telephone call, and payment of your account has still not been made, you can develop a strategy for recovering your money.
With the ‘can’t pay client’ this may simply be a matter of arranging a payments plan that you can then monitor.
With the ‘not happy client’ you can at least identify the issues and make a call as to whether or not there is justification for the complaint/s. If a review of the account is justified, then you can make that call on an informed basis.
With the ‘I won’t pay client’ nothing more needs to be said.
If a sensible resolution of the account cannot be achieved then use our legally based Debt Collection Letter Series. If free and it’s there to assist you.
If the letters don’t work, we may need to discuss legal action to recover your money.