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Monday, December 4, 2023

How You Can Safeguard Your Business From the Past Due Clients

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One of the most frustrating things in business is to provide your services or products to a client, only for them to stop returning calls and avoiding paying your owed dues.

Past due clients are a problem that many businesses face, especially those in the staffing and recruiting industry.

Effective Strategies for Handling Past Due Clients

Past due clients can be a significant headache for you and your business because of how you lose out on money, whether you pursue a case or not. Not everyone will know how to handle a client that hasn’t paid their dues effectively.

This is why we have put together a list of the things that you can do to make sure that you can effectively handle these types of clients. We’ll first discuss preventive measures so you will minimize the number of past-due client cases you face.

Get a Contract or Personal Guarantee Signed

One of the most important things to do when doing business is to make sure that you have a contract or a personal guarantee. This is especially true if you’re offering services or products that will be paid for later.

A contract is a legally binding document, and you will be in a much better position to collect from a client with an outstanding debt if you have a signed contract in your possession.

You may think that this is a simple thing to do. However, we still get a large number of clients who failed to get their contracts signed. The amount of trouble you’re going to have to go through is a far steeper price to pay than having someone sign a contract.

We have experienced a debtor’s attorney using the excuse that there was never a discussion to pay for the service because the debtor never signed a contract. The worst part is that this excuse held up in court. So make sure to have a contract signed to avoid this worst-case scenario.

Make Sure That Your Contract Has Terms and Conditions Protecting You

Now that we’ve talked about getting a contract signed, now let’s talk about the contents of said contract. Your biggest priority when making a contract is to make sure that it covers you legally and ensure that your business partner won’t be able to get out of paying the money they owe you.

This is why you should make sure that your contract has various terms and conditions that ensure this.

Another thing you should be taking note of when making your contract is to make sure that it stays consistent. Always make sure that you check the wording in your contract multiple times.

These changes can complicate things in a court of law and will tip the scales in favor of the debtor. Sometimes you may even end up voiding yourself out of your contract if you have any contradictory statements.

Check a Client’s Credit History Before Working With Them

One of the best ways to check whether a client is capable of paying for your products and services at a later date is to check their credit history.

This paints a picture of how well they’ve been paying other companies. A company that has been paying other companies on time will be great to work with. However, a company that has been paying sixty, ninety, or more days after their due date is a risk that you may want to avoid.

This can even be a sign that a company is starting to go under or bankrupt.

There are several ways you can do a credit check on companies you’re going to work with. One of the best ways is to go to a site that offers a credit check service like Experian, Equifax, or Dun & Bradstreet.

Their credit reports can help you decide a client is trustworthy enough to provide your services. However, in the end, it is still up to you whether you want to take the risk or not.

Options That You Have if Preventive Measures Don’t Work

Prevention is better than cure is a saying we like to say. This is why we want you to make sure you cover yourself with preventive measures whenever you do business.

However, not every precautionary measure is perfect, and there will always be clients that will try to do their best to get out of paying their debts.

In these cases, you have to take a proactive stance and make sure you choose one of two options whenever you have a past due client.

Get a Lawyer

The first option is something that all businesses will be familiar with, and that is getting a lawyer. If you want to take the case to court, then having a lawyer will ensure that you have a better chance of winning the case.

A good lawyer will know the full extent of what they can do in a court of law and will do everything they can to win your case. They will also be able to protect you from being countersued.

Once you have a lawyer, you should remember that he or she will now be your representative, and everything has to go through them before being handed out to your debtor.

Have A Collections Agency on Call

A great alternative to getting a lawyer is to have a professional collections agency step in instead. Many of these companies have the experience and expertise to handle most collections problems that you can throw at them.

The best part is that most of them will have a specialized team of lawyers that have most likely handled a case similar to yours.

However, you should know that each company will specialize in a specific industry to ensure the quality of their service. So you should make sure that you contact the right company for your industry for a better chance at getting your owed dues.

Final Thoughts

Past due clients are a significant problem for many businesses; however, with the right know-how, you’ll be able to keep these types of issues at a minimum.

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