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  • Writer's pictureRic Armstrong

Best Practices for Collecting Past Due Accounts

If you’re in business, people owe you money. Nearly every business owner has at least a few slow-paying customers or clients—and when they fail to pay, it can hurt the bottom line. For this reason, business owners should follow certain basic protocols and procedures in attempting to collect on their accounts receivable, both to protect the customer relationship (when possible) and to stay well within legal bounds.

For best practices, I recommend businesses follow the guidelines of the Fair Debt Collection Practices Act (FDCPA) and the Texas Debt Collection Act. While these laws apply primarily to third-party collection agencies, and not the original creditors, they still provide good signposts and safeguards for business owners attempting to collect debts so they don’t inadvertently venture into harassment territory. Additionally, they provide some basic wisdom for sound collection practices. Let’s look at a few a/r collection “don’ts” based on these laws:

Don’t call your customers before 8:00 a.m. or after 9:00 p.m.

Don’t use profane language or threaten violence. (No decent business owner should ever do this, anyway.)

Don’t call accounts receivable multiple times a day.

Don’t threaten past-due customers with any specific action you are not willing or legally authorized to take. For example, don’t threaten to take a customer to court unless you’re genuinely ready to take that step. If the customer doesn’t pay and you don’t follow through with a lawsuit, you will be creating an image of a business that doesn’t follow through. Additionally, if the case does proceed to court, the customer could turn it against you and make you look bad.

Don’t threaten to garnish wages or put a lien on the customer’s homestead. The State of Texas has some of the broadest debtor collection statutes and constitutional provisions in the fifty states. You can only do some of these things in very narrow, specific situations. Don’t set yourself up for failure, or to not be taken seriously.

Don’t continue to call a customer who disputes the debt. Instead, focus on providing proof that the debt is valid.

For accounts receivable that are especially large or difficult to collect, you may need the ongoing, proactive advice of a Dallas Texas business law attorney. Call Armstrong The Law Firm, P.C., today at 972-424-L-A-W-S (5297).


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