Cash flow problems are one of the greatest threats facing small and mid-sized businesses. The U.S. Small Business Administration notes that poor cash flow management is one of the biggest causes of failure for many companies.
For businesses, late payments disrupt everyday operations. For each payment missed, day-to-day management of routine activities becomes more challenging, investment in growth becomes impossible, and a reliable economic outlook becomes hard to maintain. When customers get behind in payments, you need to make a snap decision. Will more reminders be effective, or should you call in the professional debt collectors or take legal action?
At Paul Humbert Law, we know how important it is for your business to receive current payments. We help you apply the legal tools and strategies you need to safeguard your financial well-being.
Early Warning Signs That You May Need Outside HelpIt is helpful to find the following indicators that your collection process is not so effective anymore, before you have to call in outside support:
Combined with these trends, this suggests that informal efforts to collect the debt have reached a limit. It is around this time that many business owners consider using professional debt recovery services, either through collection agencies or an experienced business debt collection lawyer, such as those at Paul Humbert Law.
Any effort to collect a debt, whether in-house or through a third party, must comply with federal and state laws. Companies that do not pay attention to them may be prosecuted under the law, even when the debtor evidently owes the money.
The main federal law governing much of collection activity is the Fair Debt Collection Practices Act (FDCPA). However, the FDCPA applies only to personal debts (although there is a restriction on its use personally, most states apply it to commercial settings as well). The Act sets stringent boundaries on what a debt collector may and may not do, including prohibiting harassment, misrepresentation, and contacting a debtor at an unusual time or place.
Other controls are exercised by the Federal Trade Commission, the Consumer Financial Protection Bureau, and state laws, which stipulate the acceptable practices for collecting overdue balances. Businesses also need to ensure they provide proper written notice, use the correct name of the creditor, and respect the debtor’s right to challenge the debt.
Enforcement is legally defined, and such enforcement steps, such as a lawsuit or litigation, require the assistance of a professional lawyer.
Employing a lawyer who has experience in collections of commercial debts is considerably more than the benefits of other debt collection firms or agencies.
What Lawyers There Can Do Which Agencies There Cannot:
A majority of collection agencies are communication-based, rather than enforcement-based. In case a debtor becomes unresponsive, declares insolvency, challenges the amount, or refuses to pay, only an attorney can take the necessary action to recover legal fees. Firms such as ours at Paul Humbert Law assist creditors in using effective strategies to collect business debts and reduce the risk of misconduct or unlawful conduct.
Getting Your Case Ready Before Escalation.The preparation helps you reinforce your position before you submit to your business debt collection agency or attorney. It is essential to keep a record of the amount to determine whether it is large or small.
Keep copies of:
Properly documented files simplify the court proceedings and assist your lawyer in finding the most effective way to go. It also defends you if the debtor tries to challenge the debt or claims that the debt collector cannot contact the debtor.
In cases where the debtors are in financial crisis, a structured repayment system can save the business relationship and a portion of the revenue due. A well-timed, strategic offer can sometimes prevent litigation.
Legal escalation is not the first step; it is the right step when the other strategies have failed.
Ordinary Reasons of Legal Intervention:
The role of Legal Intervention in solving Stalled Accounts.
A court may decide after litigation is initiated that enables the attorneys to:
These are solutions that collection services cannot provide. In a firm such as Paul Humbert Law, it is always aimed at adopting the most effective strategy- be it through negotiation, enforcement, or complete litigation.
It is not necessarily easy to determine when to engage a professional in the debt recovery process, but recognizing the first signs of a stagnant debt portfolio can save unwarranted financial expenditure.
It is possible to protect your business and maintain healthy operations when you understand the legal system, have your documents prepared, and recognize when an attorney’s intervention is necessary.
In cases where your business is encountering overdue invoices or experiencing stagnant collection processes, the lawyers at Paul Humbert Law can provide strategically based, yet legally sound, assistance to recover what is owed to you.
Are you unsure of what to do next or just confused by state and federal statutes? Do you need someone to guide you on what to do, or just complete hand-holding and judgment?
Our team is on hand to defend your cash flow and financial standing. Today, contact us to discuss your situation and receive clear direction toward a resolution.
