How to Collect Debts From Consumers

Debt collections might be one of the least desired activities of business owners. But to make a profit, businesses must receive payment for their products and services. Once payments have become delinquent, it is imperative that you initiate collection activity against a debtor as soon as possible. The sooner you do, the more likely you are to collect unpaid debts from consumers.

• 1

  Call the customer and tell him his payment is late. Do not be rude, since it is possible he forgot to pay.

• 2

  Send the customer a written notice outlining her delinquency. Be polite if it is within the first 30 days. If you plan to assess a late fee, notify her of this in the letter.

• 3

  Hire a collection agency if you are unable to reach debtors and they still have not paid their debts. The agency will do the legwork for you, but it will charge a percentage of whatever amount it recovers from the debtor.

• 4

  Tell the debtor you'll accept a certain amount as a settlement. You might have to accept less than you are owed, but a partial payment is better than no payment at all.

• 5

  Hire an attorney to write a notice that you will file a lawsuit unless the debt is paid. The threat of legal action can give a debtor the impetus to make a payment or to contact you regarding a settlement.

• 6

  Write off the debt as a tax loss. This reduces your tax obligations.