It can take a lot of work to keep some of your commercial clients on track with their payments, and some of them are harder than others to push toward compliance.
But, how much of a grace period do you give? How much is “too much” when it comes to working with someone about an unpaid bill?
You know what the law says about giving your debtors fair notice that you’re about to send them to collections or start reporting them to credit bureaus, but that’s not the only thing you should probably consider. Here are some thoughts about when to refer a debt to collections.
Consider your own internal policies
Basically, you need to be true to your word when it comes to how much leeway your debtors have. If you are too flexible, debtors will know that the 45-day payment period they agreed to isn’t exactly enforced. Decide on a rule and stick to it so that you don’t develop a reputation for being a “soft touch.”
Your attempts to resolve the issue
It can help to have escalating warnings to your debtors. A 30-day reminder note on an unpaid invoice by email should be sufficient to jog someone’s memory if they just forgot to pay an invoice.
By the 60-day mark, you need to have a frank discussion with the debtor about what’s happening with the account and try to find a workable solution.
The overall reception you’re getting on your own
If the debtor is avoiding your calls, seems irritated that you have the nerve to try to collect or starts basically making promises without any follow-through, it’s probably already time to move to proactive collection tactics.
When you have accounts that go unpaid, it can negatively affect your bottom line. Find out how experienced legal guidance can help you recover what you’re owed.
