If you’re a business owner who has non-paying clients, you know how common this can be and how frustrating it is. You need the payment for the products or services that were already rendered, and it’s holding your business back to be without this money. It’s revenue that you expected and that you probably wanted to reinvest into the business. Every day that you’re without it means your business grows a little bit less.
But you also probably have heard people say that the simple solution is just to take back the products that you sold. And that certainly does work with something like an automobile. Companies that offer car loans will begin the repossession process if the individual stops paying on that loan, knowing that they can get some value back by reclaiming the vehicle and selling it again. But will this always work?
There is not always something to repossess
The problem with using this as a blanket fix is that some types of debt don’t have any physical possessions that are connected to them. There is nothing to take back.
A great example of this is a student loan. At the end of their term in college, that student has received an education, but it is simply knowledge that they have gained. The only physical asset that they have is their diploma, which is just a piece of paper.
The same thing can often happen with many services. For instance, lawn care companies will sometimes go unpaid, even though they already cut the grass, watered the plants and did all the other work they needed to do. You can’t repossess services that have been performed.
As a result, business owners in these spaces need to know about wage garnishment, collections efforts, and all the other options they have to get the money that they are owed.