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How to collect on credit

If you use your credit cards to make your purchases, borrowed money to buy a new house or start a business, you become a debtor. If you struggle financially and decide to skip a few monthly credit card payments, falling behind on your mortgage or business payments and you didn't try to work out your financial issues with your creditors, you may be contacted by a debt collector.

A debt collector is any individual who usually collects money from people that is owed to others. This individual can very well be an attorney who is an expert on collecting debts on a regular basis. There are many ways a debt collector can contact you depending on what information he has on you from the creditors. If your creditor provides him with your residential address, phone and fax number, then he will use any of this information to try to get in touch with you. However, a debt collector may not try to reach you at any times or places that are not acceptable or reasonable, such as before 8:00 am or after 9:00 p.m., unless you agree for him to do so.


As a business owner, if you have customers that owe you money, the process of collecting an overdue account can be very frustrating. Not getting paid on time and on a regular basis can endanger your business. You need to be paid to stay functional and continue to deliver service or products to your customers. You need to establish the best way to have your customers pay you whether it's all up front or offer terms such as payments within 90 days. Whatever you decide, make sure that your customers are very clear on your policy before starting work, and understand that there will be extra charges if they don't make their payment on time. All of these late payment surcharges should appear on all your invoices.

If you provide goods or services on credit, make sure you have a credit policy in writing and posted in your store or available as a handout. Try to enforce your credit policy. If you have met all your obligations and the customer has not, you absolutely have the right to confront him personally and try to straighten it out. It may be that the customer has a very good explanation why he has not made any payments yet such as because the invoice is lost or is waiting for approval. There will be other customers that only use cash as a way of payments and may need extra time. Consider all these situations and decide how you want to establish the best way of your customers making payments. If you know some of your customers well enough, you may want to work something out with them such as giving him the extra requested time or the best installment payment plans. Make sure that both, you and the customer acknowledge the agreement and honor it to the best of your ability. Follow up on your customers' payments.

But after so many attempts of trying to work out financial issues with your customer and you are still not getting paid, this is probably a good time to contact a collection agency and have someone else try to collect your money. Most of the collection agencies charge a fee for their services or demand a percentage of the invoice amount. Do what you think is right and what gives you the most money. You can choose to hire someone to go after the customer for his delinquent account or simply dismiss the bill all at once because the fee to hire someone is much higher than what your customer owed on his invoice. Try to learn from this experience and be tougher and firmer if you run into a similar situation. You can consider changing your strategies for collecting on delinquent accounts or ask for help from an organization that has experts who can help you establish payments and credit policies that makes sense for your business.

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