Photo by G. Loie Grossmann / Philly New Media


The Ten Commandments of Collections

1.   Know who the customer is.
Is the customer an individual?
A partnership?
Is the partnership a limited or a general
A corporation?
What is the debtor’s identifying number?
Social Security number?

Tax identification number?
What is his credit basis?
What credit cards does he have?
What bank does he use?

2.   Update your sales agreements.
Obligate the debtor to pay a late fee.
Obligate the debtor to pay interest from the date of breach, court costs and attorney’s fees.

3.   Always keep the first check and also at least one check per year from each customer.
If your business is small or does not require you to maintain staff to handle accounts, try to keep every check.
Use of this approach will enable easier access to liquid assets in the event of litigation and garnishment

4.   Invoice promptly.

5.   Diary all accounts receivable.

6.   Send firm but fair collection letters.

Never threaten the debtor.
State your position accurately.
Provide thirty days for the debtor to respond and to contest allegations the debtor contends are inaccurate.

7.   Retain counsel to institute suit where you conclude suit is appropriate.

8.   Cooperate with counsel at the pre-litigation and litigation stages.
This includes leaving all negotiation with him or her, and securing the witnesses and documents he or she needs.

9.   Provide your attorney and the authorities with the information each needs to go after the debtor.

10.   Promptly notify your counsel of all funds recovered.

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