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Collecting on commercial debts

On Behalf of | Jun 9, 2020 | Legal Blog

Your small business seems to be thriving — right up until you try to balance the books. You have several commercial accounts that are past due, and the tally owed is significant.

What do you do now? Typically, you have four options for dealing with business-to-business debts:

  1. Keep billing, calling and following up with your debtors and hope that they pay
  2. Negotiate a payment plan or some kind of modified agreement about what’s due
  3. Sell the debt to a collection agent or otherwise assign it to someone else
  4. Sue the debtor in either small claims court or civil court for what you’re owed

What’s the best option? That depends on your situation and your perspective. Perhaps one of your debtors is a long-standing client who has fallen on hard times. In that situation, you may be inclined to defer the bill for a little while or negotiate a payment plan of some kind, especially if you expect their situation to improve and you want to preserve the business relationship for the future.

Selling the debt to a collection agent or assigning it away generally gets it off your books, gives you at least something back on the account and allows you to move on, but it likely will end your relationship with the client. That may be the best option, however, if the debt is substantial and you can’t afford to simply extend their due date.

If the debtor is clearly ducking your calls and ignoring your letters, however, it may be time to talk to an experienced business litigation firm about your situation. Sometimes, the only way that you can get the attention of that kind of debtor is through legal action. Our website has more information that may help you decide what steps to take next, so we encourage you to continue reading.