Being a creditor, one can certainly have difficulties in collecting business debts. People and personal emotions run inside the mind of a lender when collecting a business debt. Having this feeling is understandably reasonable. The stress and fear of someone running away with hard earned finances is a great source of agony for a creditor.
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Lender Life (Being Professional About It)
For the lender, the worst customer to have are the ones who go to lengths in avoiding payment. These are hard to handle situations and sometimes may require legal and police assistance. Customers who tend to have many payments, pay sporadically and may do late payments. There are also clients who have no problem paying on time but cannot pay because of financial trouble.
As a rule of thumb, creditors will want to have customers who fall into the last two categories. Although work may become difficult, paying is still certainly doable. Managing and agreeing to payment schedules and agreements can be a big help when it comes to collecting a business debt.
Wise creditors often devise effective strategy when it comes to collecting a debt. Sending notices on time, proper addressing of dues, and setting reminders are just some of these practical ways. Here are more of them:
Avoid Harassment
Being a creditor is also considered a business in its rights. A good business needs to have a good name and reputation. Preventing harassment is a proven way for owners not to drive away potential customers.
Being mindful of actions such as leaving one call per day to a late paying customer is enough. Actions that constitute to harassment can become the basis for a lawsuit and a customer dropping out of payment for a creditor. Wise lenders are also patient and never speak ill of a debtor.
Phone calls must be short
Keeping messages short, concise and formal is a good way of showing how professional a creditor is. Making sure that the person on the other line does not take it personally is also a good way of showing courtesy. Creditors should also be calm while speaking despite many differences or shortcomings a debtor has.
Demand Letters
Letters that a creditor writes as reminders for a debtor are called demand letters. An experienced lender knows that depending on a phone call every day is the same as failing to remind a debtor. Demand letters should go along with phone calls.
Seasoned lenders also save copies of the letter that they send. If ever a debtor is still insistent in not paying debts, a creditor can go to a collection agency.
Collection Agency
It is often an excellent idea to ask for help when collecting business debts. Collection agencies are professionals when claiming money that is way past due. These companies also write demand letters and will send series of mail in escalating intensity for a fixed price.
Collection agencies can also be the last hope of getting money from a debtor. Fees may range up to 50% of the due amount, sometimes getting a little sum of money is better than nothing.
Filing Lawsuits
If all else fails, filing a lawsuit may yield more positive results. Legal enforcement can be a big help, especially when pursuing elusive debtors. There are high costs that come with this method but in case that an owner finds it reasonable enough to continue a case, then going to a court can be very beneficial.
Takeaway
As people know, starting up a business has its risks. Being a creditor certainly is a risk itself. Evading payment, debtors that vanish suddenly, and due dates not being met are just some of the things that a lender faces on a daily basis.
To make collecting debt from a business become easier, there are a lot of ways a creditor can do so. Making phone calls professionally and sending demand letters properly are just a few ways in reminding debtors to pay. If debtors continually evade or disregard demand letters, lawsuits can ultimately be filed, and legal enforcement can do its job.
Author Bio:
As a writer currently living in Tampa Bay, Marcus Ellsworth is very knowledgeable in the field of business management and advertising. He also has lots of interests regarding cultures and society. When Marcus isn’t writing, he loves to spend time and cook for his family. 🙂
