At some point, you’re bound to come up against a problem that’s familiar to most small business owners: A client, customer, vendor or someone else won’t pay their bill. It’s frustrating to realize that your bills and reminder calls are just being ignored. But knowing how to handle the situation can help you protect both your company’s reputation and your bottom line.

 Here are some tips that can help you cope: 

  1. Send demand letters and make calls. But watch your language, as you never want to say anything threatening or abusive. The last thing you want is to say something that could potentially damage your business reputation or cross legal lines.
  2. Time your demand letters and calls carefully. Phone calls should never be more than once per day and your letters should be spaced out at least weekly.
  3. Keep track of your collection efforts. Copy the demand letters and put them in your client’s file. Note when you made follow-up calls and whether you spoke with someone or just left a message. That information can be useful if you eventually take the issue to court.
  4. Recognize that your debtor may be struggling with financial issues. They may respond to an altered payment plan or an offer to settle if that’s the case.
  5. Be prepared to sue. If you suspect that your debtor is just avoiding the bill because they don’t want to pay (as opposed to those who can’t pay for some reason), consider heading to small claims court or filing a lawsuit. (Which option is open to you may depend on the size of the debt you’re aiming to collect.)

Late-paying and non-paying debtors don’t have to be the bane of your business. Talk to an experienced business law attorney about your concerns and see how they can help.