Tips for Businesses for Collecting Debt
Cash flow and collection of outstanding invoices is critical to the success of small businesses. At Merovitz Potechin, we understand the time sensitivity of your accounts receivable and the importance of collecting debt quickly. Here are some tips to help small business operators collect money on time, all the time:
- Have a system in place that alerts you to when invoices are 30, 60 and 90 days old.
- Do not wait until invoices are outstanding for 90 days before you start collection efforts – the longer you wait, the less likely you will be able to collect. Start following up right at 30 days, again at 60 days, and again at 90 days.
- Be firm in asking for payment and make your requests in writing. You supplied a service or product and you are entitled to be paid promptly.
- If your client indicates that it cannot pay an invoice in full, obtain a specific commitment in the form of a repayment schedule and ask your client for a series of post-dated cheques.
- Ensure commitments to pay and acknowledgments of indebtedness are in writing and signed by all parties.
- If your client does not meet an agreed payment arrangement, follow-up promptly.
- Keep written records of your collection efforts.
- Always be professional. It might help you retain a valuable customer relationship, especially where the customer may just be facing temporary financial troubles.
- Seek advice if you are provided a release to sign in exchange for partial payment. Although partial payment may seem better than nothing, it is important to know what you could be giving up.
When is it too late to sue for debt owing on multiple issued invoices?
If you are having problems collecting debt, here are ways our lawyers can help:
- Calling or emailing your client.
- A third party stepping in on your behalf can help collecting from debtors who are refusing to pay.
- Sending a formal demand letter.
- Sometimes all it takes is a letter from a lawyer outlining the situation and the steps we can take for your client to understand that they need to pay their outstanding invoice.
- Starting a claim
- This can feel like a big step to take, but sometimes just starting a claim can be enough to spur a debtor to pay their debts or enter a payment plan.
- Collecting on a judgment
- If you are successful with a claim and receive judgment, that does not guarantee the debtor will pay. We can assist in enforcing that judgment in a variety of ways including garnishment, seizure and sale, and registering liens and writs.
If you require assistance with collecting debt and outstanding invoices, we can help. Contact our Collections Team at Merovitz Potechin LLP.
Questions? Request a consultation with our experienced collections lawyers.