When your valued or trusted customers stop becoming loyal by paying their bills, a business must reflect on the next step in the pursuance of debt. It is best to have standard procedures established when there is a generation of a new client all the way until you have the possibility of dealing with the past due AR. The procedures can be covered starting with a credit application, contract or any signed documentation where your client agrees to pay all costs incurred. The performance of a background check on the individual or business can also prevent potential long-term problems Once you have made as many demand letters, visits and phone calls that your time can permit, the contacting of a debt collection agency will be your best decision.
Once you have researched to find the best agency to fit your company’s needs for collections, it is a very good idea to evaluate the potential collectability of the accrued debt. The first aspect you should look at is the type of company category that fits your client.
- LLC– shortened for limited liability corp, very much like an Inc. company. This formation gives business owners the lowest form of liability
- Inc.-was a once sole-prop or under the responsibility of individuals but now has it’s own legal entity so that no one is personally liable
- L.P– this is a limited partnership in which only one individual, of a group of two, is responsible for a majority of the company’s financials.
- Sole Proprietorship– this means the business is not a legal entity and all financial responsibility falls under the person who has created the business.
Such little responsibility from various companies that when it comes time to have your money collected. The terms of a credit application with a personal guarantee could be your saving point for gaining funds for your past due accounts receivables. The benefit of having a personal guarantee is that if a company goes out of business or if they were never registered with the secretary of state, debt collectors are now able to pursue the individual for the debt payoff. If you did business with another company and there is no personal guaranty, and they shut their doors, you would not be able to pursue anyone for the money owed to you. Collection agencies often have a suspected timeline for getting your money back and when they realize that their expertise no longer can gain any ground with the debtor, it is time to look at the option of obtaining legal assistance. If you employee the right kind of agency, they will need to be versatile and legally able to work in any state and various countries. Not only would the vast reach of their resources be beneficial, but their legal retainer or knowledge of debt laws should also be crucial in your choice. A company that has strong relationships with lawyers in every state is a key factor for pursuing the really difficult debts.
With all of this said, no matter how much time or effort is put into collecting a debt, sometimes it all has to cease when it comes to the issue of bankruptcy. Depending on the type of bankruptcy, the ability to pursue a company or individual may come to a complete stop or take a long drawn out process.
Whichever scenario your company may be going through, no matter how many accounts you need to get collected, here at Burt and Associates we employ a group of specialized collectors that have an extensive range of experience. Call us today at 1-877-740-7839 to talk about any questions or concerns you may have about collectability.