Securing Your Rights: Strategies for Successful Collections and Commercial Litigation
A delinquent account—whether from a customer, client, or any other type of debtor can be a serious financial burden for a business. According to data from the Board of Governors of the Federal Reserve System, nationwide commercial delinquencies in the second quarter of 2023 hit their highest level since before the COVID-19 pandemic. For companies, a comprehensive and proactive collection strategy is a must. Here, our Los Angeles collections attorney provides an overview of the strategies for successful collections and—if needed—litigation in California.
Strategies for Successful Collections
Strategy #1: Maintain Accurate, Detailed Records
The foundation of an effective commercial collection strategy is maintaining meticulous, accurate records. When pursuing overdue payments, it is essential to have reliable information about the transactions and the debtor. Among other things, these records can include invoices, contracts, communication logs, and payment histories. An organized system not only helps in tracking delinquencies but also strengthens the credibility of your claims. Beyond that, detailed records are instrumental in case a legal recourse becomes necessary.
Strategy #2: Communicate—Systematically Follow-Up With the Client/Customer/Debtor
The importance of communication cannot be overstated. Indeed, communication is key to successful collections. Companies should establish a systematic follow-up procedure that initiates contact shortly after an invoice becomes overdue. Communication efforts can include reminder letters, emails, and phone calls. Ensure that communication is polite and professional—remember that aggression or harassment can tarnish your business’s reputation and might even be illegal. You do not have to take on the commercial collections process alone. Do not hesitate to retain the services of a Los Angeles collection attorney.
Strategy #3: Be Proactive (Do Not Allow Delinquency to Linger)
Being proactive is crucial in debt collection. The longer an account is delinquent, the less likely it is to be collected. Indeed, this is one of the most important lessons in commercial collection: Each day an account is overdue, the greater the risk is that it will not be paid back in full. Addressing overdue accounts promptly signals to the debtor that payment is expected without delay. Monitoring accounts receivable and identifying patterns or trends can enable early intervention. A proactive approach can involve everything from offering payment plans to demonstrating a commitment to maintaining cash flow.
Strategy #4: Use Collection Efforts to Gather Information and Obtain Commitments
When engaging with a debtor, use the interaction as an opportunity to gather information. Understanding the reasons behind the delinquency can provide insights into the debtor’s financial situation and willingness to pay. Be empathetic but firm in your communication and aim to obtain a commitment for payment. This can include setting up a payment plan, renegotiating terms, or acquiring a written promise. Keeping an open line of communication can foster a more cooperative relationship with the debtor, making them more likely to adhere to the agreed-upon terms. As you work through the collection process, continue to document new information and commitments, as this can prove invaluable in both resolving the debt and informing future business decisions.
The Proper Approach Secures Your Rights and Sets You Up for Better Collection Results
Adopting a comprehensive and well-structured approach to successful collections not only increases the likelihood of recovering funds but also secures your rights in the process. Indeed, it is essential that you take the proper approach to remain compliant with debt collection laws, which safeguard both the creditor’s and debtor’s rights. Having detailed records, systematic communication, and obtaining commitments can provide the legal footing needed in case the issue escalates to litigation. Beyond that, showing respect and professionalism can also sometimes preserve a relationship.
In addition to the immediate goal―collecting on the debt in question—employing a proper approach sets the groundwork for improved results in collection efforts in the future. By demonstrating a consistent and fair collection process, your business sends a clear message to clients and customers, which can lead to more timely payments. Furthermore, the information gathered during the collection process is invaluable for assessing creditworthiness and making informed decisions on future transactions.
Contact Our Los Angeles Commercial Collection Attorney for Legal Guidance
At the Law Offices of Andrew Ritholz, our California commercial collection lawyer has the legal experience and professional expertise that you can count on. If you have any questions about how to secure your rights with well-tailored collection strategies, we are here to help. Contact us today for a confidential initial consultation. Our firm provides collection services and commercial litigation services to clients in Los Angeles and throughout the surrounding region in Southern California.