Managing business finances can be difficult enough as is without worrying about unpaid debts. Avoiding debt collection efforts might even seem favorable at first, especially if one is already dealing with ordering supplies, hiring workers and training new employees. Although this step may feel uncomfortable, it is vital to the financial health of small businesses.
Maintain a credit agreement and policy
Having a credit policy, procedure manual and credit application form are essential for legally and successfully collecting debt when necessary. Small businesses in Georgia should utilize credit agreements, which are legally binding contracts. These list out relevant conditions of loans or credit extensions such as repayment terms and what happens if the debtor fails to pay.
Collections — the first step?
It is generally better to take a different approach than immediately turning a debtor over to a collection agency or heading to court. There are often many steps one can take before choosing either of these alternatives. However, the reality is that business owners cannot wait on repayment forever. When going to court it is possible to secure some of the following:
- Liens
- Money judgements
- Additional help
Georgia business owners deserve the opportunity to run their businesses successfully. It is impossible to do this without the right financial support, including the money that comes from owed debts. Business owners should be sure to approach debt collection efforts with caution though, as there are many regulations that protect consumers over the financial interests of those who originally extended the credit.