A client promises to pay Friday, but Monday arrives without a deposit. With payroll approaching, you may worry about covering expenses without using personal savings.
If you run a small business in Atlanta, those concerns can make frequent calls seem justified. Yet a poorly worded demand could turn an unpaid bill into a claim against your company. Knowing which mistakes to avoid may help you pursue payment while reducing your exposure to lawsuits. Here are five pitfalls to watch for during debt collection.
Demanding an unverified balance
An inaccurate demand can weaken your negotiating position. For example, missing a partial payment could lead you to seek money your customer already paid.
How to avoid this: Before reaching out, check your contract, invoices and payment history. Confirm the balance and responsible party, then prepare an itemized statement explaining each charge.
Losing track of communications
Even a correct balance may not prevent disputes over repayment terms. If your customer promises three installments by phone, different accounts of that call could hinder enforcement of the agreement.
How to avoid this: Keep dated call notes with emails and letters in one file. Document proposed repayment terms and get your customer’s written acceptance before relying on a revised schedule.
Assuming every debt follows the same rules
In Georgia, the attorney general distinguishes consumer and business debts. The federal Fair Debt Collection Practices Act (FDCPA) excludes business debts and generally does not cover creditors collecting their own accounts.
How to avoid this: Identify the obligation’s purpose and who will pursue it. If you hire an agency to collect consumer debts, check how it handles required notices, disputes and limits on contact.
Using threats or public pressure
Even when the FDCPA does not apply, threats or abusive collection tactics can expose your business to other legal claims. Falsely accusing a customer of fraud online could prompt a defamation claim for harming their reputation.
How to avoid this: Keep your messages private and professional. Contact the customer, an authorized business representative or their lawyer instead of pressuring family members. Describe planned enforcement honestly, without threatening arrest or claiming you have a judgment when you do not.
Delaying review of unpaid accounts
Repeated reminders can take up staff time without bringing in money. Delays may also risk missing the filing deadline for your claim.
How to avoid this: Set follow-up dates and a point for assessing unresolved accounts. Review any contract terms that require notice and check your deadline before deciding to sue.
Why you may need a measured recovery strategy
A careful approach can help you weigh potential recovery against the expense of pursuing it. Consider the customer’s ability to pay alongside the time and fees involved in further collection efforts.
That assessment may guide which overdue accounts you prioritize. An attorney can then review the evidence supporting those claims and advise on settlement terms.