5 Simple Steps To Accounts Receivable Recovery -- OnlineOrganizing.com

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	5 Simple Steps To Accounts Receivable Recovery

	by Jason Ziarko

As a small business owner, one of the most challenging tasks of owning a small business is COLLECTING on past due accounts.

STEP ONE

The first step in the collection process is to send the debtor a past due INVOICE stating their account is 30 days past due and payment must be received within 14 days or their account maybe subject to further collection efforts. It is important to DOCUMENT each contact you make with the debtor, this will make your job easier down the line for more aggressive collection approaches.

STEP TWO

After 14 days, contact the debtor by PHONE and kindly REMIND them of their outstanding debt, because in some cases they may have simply forgot about the bill and sometimes will pay in full or make partial payment. After making your phone call to the debtor, allow an additional 14 days for payment to be received before sending a letter of demand for payment.

STEP THREE

A DEMAND for payment maybe needed after the debt is 60 days past due, include all documentation supporting the debt. Mail a letter, along with a copy of the past due invoice, and any other supporting documentation to the debtor. State in the letter that payment must be received within 10 days or the account will be turned over to a collection AGENCY.

STEP FOUR

Collection agency services may be needed to collect debts beyond 60 days past due. It is important to start the collection process early. Do not wait until the account is 1-2 years past due, because as time passes the debt becomes increasingly DIFFICULT to collect and collection agencies typically charge higher fees for older accounts. The collection agency will then mail the client a validation, which is a letter that states the balance due and who the original creditor the debt is owed. The debtor then has 30 days to dispute the debt, if after 30 days no dispute is received, the debt is assumed VALID and the collection process continues. If you decide to send an account to a collection agency, it is very important that you cease all communications with the debtor. Be sure to give the collection agency all the documentation available about the debtor as it will make the collection process easier with the more information you can provide.

STEP FIVE

The final step in the collection process is utilized when all other collection attempts have failed and involves taking LEGAL action against the debtor to force payment of the debt. Typically, collection agencies use lawsuits as a last resort to collect past due balances. Most of the time collection agencies will work together with the debtor to arrange payment plans, however if the debtor does not contact the agency or does not maintain their payment plan, the end result is usually taking them to COURT and obtaining a judgment. A judgment allows the agency to utilize many remedies available to them to finally collect the debt and pay their clients.

DISCLAIMER

Information provided in this article shall be used for informational purposes only and not to be construed as legal ADVICE, contact and attorney for all legal concerns.

Jason Ziarko is with Star Computer Parts. For more information, please visit our website at www.alliedadjustment.com.

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