Handling Late Payments

Q: My business cash flow is being affected by customers failing to pay on time or making partial payments. What can I do to collect on the money that is still owed to me?

A: This is an issue that is becoming more and more prevalent in these tough economic times. Sales are the life blood of every business, and that often means extending credit to make those crucial sales. If the money is not paid back in a timely fashion, cash flow problems can arise. If you find that your business is having these types of issues, you need to take a serious look at your existing credit policies. That may mean implementing a collection procedure designed to collect monies that are owed.

Before implementing any kind of plan, you need to take a close look at your accounts receivable. It is time to see which accounts are current, which might be paid with a little bit of poking and prodding, and which are ready to go into the written off pile. The account due that fall into the latter category can be put in the hands of a collection agency in an effort to recoup what you are owed, leaving you free to pursue those that can be handled in-house. You need to start working on those potentially collectible accounts as soon as possible, but also need to ensure that any action you take is done in compliance with the Fair Debt Collection Practices Act. Full information on said act can be found at the Federal Trade Commission website at http://business.ftc.gov/credit-and-finance/debt-collection

While it may be difficult to contact customers regarding unpaid debts, it is a necessary evil. It does not matter how good a customer they have been in the past or how you think it will affect future business, the reality is that you have a right to be paid what is owed. A personal phone call is often the best way to resolve such issues. It may well turn out that circumstances other than negligence are to blame for the arrears. Some may be experiencing a temporary cash flow problem, while technical issues could be to blame for others. Once the situation has been explained, you can then create a payment plan that is equitable to you both, making it clear to the client that they will only be able to order on a COD basis until the past due amount is paid in full. Should the terms of that agreement not be met, you will then need to call in a collection agency.

Many of your potential issues can avoided if you put a clear credit sales policy in place. That means having a definite idea of which customers are in fact eligible for credit and how long they have to repay it. You may also consider offering discounts to those customers who pay early. If choosing that option, you should also put in place late charges for those who do not pay on time, although you will have to have a clear knowledge of the laws that dictate how much can reasonably be charged. For more information on charges such as that, take a moment to speak to Marcadis, Singer, PA.

Marcadis Singer, PA

Florida Collection Attorney

5104 South Westshore Blvd.

Tampa, Florida 33611

info @ marcadislaw.com

(888) 547-1881

(813) 288-1881

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