Keeping the lines of communication open isn’t Kaufman’s only tip. He also suggests business owners “clearly set out the goals and expectations for the job so everything is clear.”

It is never a picnic for a business owner when customers are delinquent in paying their bills. Successful Business News spoke with collection experts about what business owners can try to do to prevent accounts receivable from going unpaid, and suggestions for next steps if those attempts fail.

Top tips for preventing delinquencies 

Kaufman has other suggestions for business owners seeking to avoid having to engage in collection efforts against late or non-paying customers.

He cites a “good invoice” as imperative for smooth transactions.

But just what makes an invoice ‘good?’ 

“The invoice should be specific, well-written, legible and itemized (providing a) description of the work to be done,” he says. 

Not only does that ensure all parties understand what is expected of them to satisfy the terms of the contract, providing a collection attorney with such thorough documentation is of monumental assistance if an account goes unpaid. 

Melissa Youngman, a solo practitioner in commercial collections near Orlando, offers additional suggestions. She advises small business owners “to be vigilant” when it comes to enforcing terms of an invoice. It’s also prudent to create a paper trail documenting a transaction, she says. 

Account receivable blues 

Attorney Yale Levy, the namesake of Levy & Associates, LLP, a busy creditor’s rights firm in Columbus, says just because a customer’s payment is late doesn’t mean litigation will be the only way to collect. When a payment is tardy, he suggests contacting the errant customer about the past-due account via phone or letter. The ideal goal is to resolve the delinquent account while salvaging the professional relationship. 

If that approach doesn’t produce a satisfactory result, it might be time to hire a collections agency or creditor’s rights lawyer. The big difference between the two is that agencies can only send collection letters or call debtors to inquire about the account. While a lawyer can provide those services, too, they can also do something agencies cannot: file a lawsuit against the entity or the person in court. 

Oftentimes, when a delinquent customer is contacted by a collections organization inquiring about a debt, they realize how determined the creditor is to get their money. “It shows you’re serious and that gets people to pay,” says Levy, also president of the National Creditors Bar Association. 

Collection efforts 

If phone calls, letters and other legal methods of attempting to collect the debt don’t work, it might be time to sue. Unfortunately, the legal system is time-consuming, expensive and intimidating to non-lawyers. 

Furthermore, every state maintains its own set of laws governing collections, so it is important to familiarize oneself with them to handle the matter pro se (without a lawyer). In fact, some states do not allow pro se lawsuits to be filed for collections if a company is incorporated. 

It’s one thing to successfully secure a judgment against someone who owes money to your business, and yet another to actually collect the funds. 

Although the laws regarding them vary state to state, several remedies are available to creditors to collect a judgment. They include bank attachments, wage garnishments, liens and executions. 

State laws also dictate how much a plaintiff may garnish from a defendant’s paycheck and how often. Jurisdictional statutes also regulate how a creditor can be awarded funds from a debtor’s bank account and how they may place a lien on personal or real property. 

In addition to wage garnishments, liens and other remedies, there is another method for recovering past due funds: after a judgment is rendered, selling it to a third party so they try to collect on it for themselves. 

Tami Kamin Meyer is an Ohio attorney and writer.