Giving credit to customers is a necessary part of almost every business, and with credit comes the business of collections. Being a creditor is no problem if customers pay on time – but what happens when a customer stops paying on time or altogether?
Your first step in granting a new customer credit is to have them fill out a credit application and credit agreement. These documents protect you, and make it easier for you to collect if legal action ever becomes necessary.
Writing off a certain amount of bad debt is fairly standard practice in every business, and you should balance the amount of bad debt with the total accounts receivable to determine if a certain debt is worth pursuing. If it is, and you have already taken the routine measures of sending follow-up notices with no response, then you should consider engaging a Creative Business Lawyer™ to write demand letters to your bad accounts, demanding that they fulfill their contractual obligations to pay what is owed.
A Creative Business Lawyer™ can often resolve bad debt issues for you without litigation, or at least help you determine if pursuing a deadbeat customer in court will be worth it in the long run.
The Parents Estate Planning Law Firm, PC
