Many companies market their goods or services directly to consumers. However, a significant portion of modern organizations specifically do business with other companies, rather than the general public. Business-to-business operations can be lucrative, provided that an organization takes on responsible clients.
Unfortunately, some companies fail to pay their invoices and may fall behind on their financial obligations. Even worse, they may refuse to commit to a payment plan because of the company’s financial challenges. In such scenarios, creditor organizations may wonder what options they have.
Even those who are familiar with debt collection rules are often more aware of procedures for collecting from individuals, as opposed to collecting on debts owed by businesses. It can be more challenging to effectively collect from a business in some cases. What options do creditor organizations have when businesses with past due invoices refuse to pay?
Seeking liens
When individuals fall behind on their debts, creditors can ask for the courts to place liens against their property. Construction companies can place liens against the homes where they perform work. Creditors can ask the courts to place liens against vehicles, financial accounts and even future financial recovery, such as compensation for a recent injury.
Liens are also possible when a debtor is a business rather than a person. The courts can grant liens against real property, valuable equipment and other assets. The possibility of losing those assets can motivate debtors to fulfill their financial obligations.
Requesting receivership
In scenarios where leaders within the company have struggled to balance the budget or properly manage company resources, debtors and other parties can request that the courts appoint a receiver. During receivership, a court-appointed professional takes control of the organization.
The receiver has the authority to liquidate assets to repay creditors and to significantly shift how the company operates to help it become profitable again. A successful receivership can result in the repayment of creditors and may also help protect a company that could be on the cusp of failure.
Learning more about unique collection options when a debtor is a business rather than an individual can be beneficial for creditors. Receivership and property liens are some of the more effective legal solutions for unpaid business debts.
