Practical Tips for Collecting Accounts Receivable

Debt collection can be fraught with legal pitfalls, but it can also be the lifeblood of your business; collecting on accounts receivable or unpaid bills is how your company brings in the cash flow it needs to pay its bills.

The last thing you want to happen when you’re collecting on a debt is to find yourself being the one sued for using improper debt collection techniques. There are a lot of laws that deal with collections, but beyond what the applicable laws say, there are some common sense, practical and operational tips you can use to help you collect legally and safely.

Consumer or Business?

Always be aware of whether or not you are collecting consumer or business debt; the latter has much fewer rules and allows debtors much less leeway to sue. That said, you still should not just let it fly when collecting on business debts. And when it comes to consumer debts, speak to your business law attorney so that you understand all the federal and state debt collection laws that could get you in trouble.

Personal Involvement

It may be a good idea to make sure that whoever in your company is collecting your company’s debt doesn’t have a personal stake in the debt—for example, someone whose commission may be dependent on what is or is not collected or someone whose performance reviews with the company is based on what is or isn’t collected.

When employees have a personal stake in collection, they may be more inclined to bend the rules—to say anything to get the debt collected. Ultimately, their logic may be that they will get their money (or benefit) if the account is paid, but if the company is sued, that doesn’t come out of their pocket.

Assume the Best

Always assume that someone who owes you money hasn’t paid because of some innocent oversight (even if you don’t actually believe that). Saying things like “you must have forgotten,” or “you may not have received our bill” can lead to better relationships with those who owe you money and lead to debtors who aren’t looking for ways to sue you.

Information Access

Make sure that whoever is collecting has access to payment information on the account. It looks terrible (and can look very suspicious) for debtors to say they paid or ask what the debt represents and the person collecting for your company doesn’t have that information at the ready.

Have a Team

If possible, have a collection team, or only designated employees assigned to collect accounts receivable. That way they develop relationships with those who owe you money and it makes collection training for your company much easier and more effective.

Don’t Harass

Even if you say the right and most polite things, calling repeatedly or at inconvenient times (early morning or late at night) can lead to bad feelings, and lawsuits.

Call the West Palm Beach commercial litigation attorneys at Pike & Lustig today for help collecting your debts legally, and safely.

Sources:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0559/Sections/0559.72.html

cnb.com/business-banking/insights/accounts-receivable-collection.html