When you’re running a business that offers a service to be paid later or offering credit to your clients, you’re at risk of one of your clients refusing to pay your service later on. Many businesses make mistakes when it comes to collecting these debts and it can become a nightmare in the long run without the proper safeguards protecting you. Luckily for you, we’ve made a list of these common debt collection mistakes that many businesses have dealt with.
Not Having A Proper Contract Protecting You
One of the most common mistakes that we see with businesses that we’ve dealt with in the past is that they don’t have good contracts. Their contracts are either too weak or don’t have enough safeguards protecting them. Some don’t even have contracts and simply go on word of mouth and trust. This mistake can be extremely costly for you as your debtor can simply say that they haven’t signed anything.
Not Having a Paper Trail
The thing about running a business is that you tend not to look back too often. This can lead to you losing track of certain transactions that may have come and gone. Having a paper trail of documents helping you out in these situations can help you avoid losing track of these transactions. And in the situation that you have a debtor refusing to pay you, you can use this paper trail to your advantage.
Any excuses that they make will be made pointless by the fact that you have papers saying otherwise. Even better if these papers are signed by the debtor themselves. So make sure that you document everything because you never know when it will come in handy.
Lack Of Communication
Communication is an essential part of any business. Without it you wouldn’t really have much of a business. Communicating also includes dealing with debtors who refuse to pay your fees. You should always ensure that you stay in touch with these debtors in order to resolve these issues quickly and effectively. Ignoring them and going straight to a court of law can be far more expensive and time consuming than simply talking it out and making an alternative solution.
You’re going to have to wait several months to even get a chance for a court hearing. You’re also going to have to pay court fees that will cut into the debt that they owe you.
Dealing With The Debtor’s Lawyer Yourself
If you have a debtor that’s being stubborn about paying their debt you may end up frustrated and end up dealing with them yourself. We’re telling you right now that this is one of the biggest mistakes you can make. This is especially true if they’ve lawyered up. Whatever you say can, and will be used against you within a court of law. So make sure that you pass whatever you want to say either through your own lawyer or a professional collections company that knows what to say and when to say it.
Debt is always a tricky subject to deal with. Regardless if you’re the creditor or debtor. We hope that this list of debt mistakes that a vast majority of businesses make has enlightened you and can help you avoid them.