Business Debt Collection in California: Making Sure You Get Paid

Posted by: kevensteinberg
Category: Areas of Practice, Blog, Business Law
Collecting Business Debt

For a California business, especially a small business, every dollar counts. And with the economic instability of COVID-19, those dollars seem to matter even more. Businesses throughout California and the Los Angeles area are facing the financial challenges that have come with 2020. And business debt has become an especially important topic. 

While we often focus on the consumer side of debt, or B2C (business to consumer) debt, it is critical for your business’s success to understand commercial debt, or B2B (business to business) debt. With consumer debt, the debtor is protected by the Fair Debt Collection Practices Act (FDCPA) and the Rosenthal Debt Collection Practices Act. While consumer debt is often smaller than B2B debt, the same is not true for commercial debtors. B2B debt is typically much larger than consumer debt and the same legal protections do not apply for business debtors. Having a client fail to pay an invoice or keep up on payments for a service your business provided  impacts your company’s growth and success. Luckily, the expert commercial debt attorneys at Steinberg Law can help your business navigate the unique world of B2B debt and commercial debt collection so you can get paid. 

Tips for Staying on Top of Accounts Receivable

At some point, every business will face a client who doesn’t pay on time, who can’t afford to pay the full amount owed, or who refuses to pay. But there are steps your business can take to avoid collections problems and keep cash flowing smoothly. To help avoid non-payment or slow payment from business clients, businesses can:

  • Send clear invoices. Invoices should be clear and complete. They should include the services provided, the amount due, and instructions for how and when to pay.
  • Consider offering an early payment discount. Depending on your industry, offering a discount, even one as small as 2%, can incentivize commercial customers to pay invoices early. 
  • Establish a penalty for late payment. You can also incentivize early or on-time payment by implementing a policy that includes a fee for late payments. 
  • Check credit scores. If you are extending credit to commercial clients and customers, check their business credit scores. With a score check and credit management, you can help ensure that you are extending credit to reliable companies. 
  • Establish a procedure for following up. Sometimes people just forget to pay an invoice. To help stay on top of outstanding invoices, follow an established schedule for invoicing and following up on past invoices. 

An Account Is Not Paying—How Do We Collect Their Payment? 

If an account comes due and hasn’t been paid, there are steps you can take to begin collecting that payment. Begin with friendly outreach and requests for payment. There are many reasons an invoice might have been delayed: there may be a dispute about the amount, an error in the owing business’s accounts payable, a quality issue, or another misunderstanding. Remember that each B2B client you have represents a valuable business relationship.

In the early stages of collections, you can start by resending the invoice along with a reminder letter. If you receive no response from reminder letters, call the client to remind them of the invoice and potentially pay it over the phone. If there is no response, you can send an initial collections letter, a follow-up letter, and a demand letter. Remember that in your attempts to collect on business debt, your actions should be reasonable and legal. Although not getting paid can be frustrating, avoid pitfalls such as harassing the client in order to get paid. 

If, after taking these initial steps, the client still has not paid their debt, hire a commercial debt attorney to intervene on your behalf. Unlike a collection agency, which will basically use the basic tactics of letters and phone calls to collect debt, a collections lawyer provides customized service and expertise. An experienced Steinberg Law attorney knows the intricacies of debt law and will follow those laws to collect on your debt, giving you the peace of mind to know you won’t have mistakes that could open you up to claims from debtors. 

An experienced debt collection attorney also has more tools at their disposal than a collection agency. They can trace assets to discover the ways a debtor can pay their debt; they can negotiate a partial payment; and they can pursue wage garnishments, bank levies, litigation, and other legal action to collect on debt. Even in the initial steps of drafting and sending a demand letter, having an attorney on your side can bring faster results because debtors want to avoid legal action. 

My Business Is in Debt, What Can I Do? 

If your business is the one in debt and is unable to make the necessary payments, a business debt lawyer can help. Business attorneys are familiar with every legal option you have as a commercial debtor. They can help you determine whether you should settle your debts or file for bankruptcy. An expert attorney can also help negotiate payment plans, debt reductions, and other settlements to the benefit of your business. If you feel you should not owe the money being collected, a commercial debt attorney can evaluate your case and fight for your rights as a business owner. 

No Matter Your Business Debt, Our California B2B Collections Attorneys Can Help

Whether you need to collect on B2B debt or you are struggling to keep up with your own business debt, the expert commercial debt attorneys at Steinberg Law can help. We will work with you on your specific case to build a customized plan for collecting business debt and getting you paid, or helping you settle debt and get back to work.

Maximize your cash flow by putting our decades of experience in California business debt collection to work for you and contact Steinberg Law today.

Author: kevensteinberg