One of the most important factors in successfully collecting any outstanding debt is understanding all of the details that are affecting the situation. The type of debt, person responsible for the debt, and even the general economic conditions can all play a major factor in whether or not you are able to get paid.
When it comes to understanding the details of a particular situation, one thing that often trips up many amateur debt collectors is understanding the differences between collecting from an individual (B2C) and from a business (B2B). Let’s take a look at how the process of collecting from a business can be a bit different from your approach with a single consumer.
The Structure of a Business
First and foremost, you have to understand that the structure of a business is set up to protect the people behind the business from creditors like you if the business should fail. That means you are going to be at a disadvantage from the very start.
In most cases, if the business goes bankrupt, you are going to be left holding the bag. Except in extremely lucky situations, those outstanding debts will almost never be able to be transferred to the people who vouched for the business.
However, the goal of any business is to stay in business and make money. So filing for bankruptcy is not something that is all that likely to happen if you are dealing with businesses that have a strong track record of earnings.
Why Are They Not Paying?
Businesses are also different from consumers in the reasons behind their failures to make payments. Many businesses operate on a seasonal basis and you may just be in the middle of a slow time that will end when business picks up in the next season. Businesses can also suffer at times when competitors start price wars to acquire market share.
Obviously, you would prefer to get paid no matter what. But many times, there are justifiable reasons why those businesses are struggling at the moment that don’t mean doom and gloom for the long-term outlook. If you are able to be flexible and work with a business, you can often find ways to get paid, though not on your original terms.
Starting the Process
Even though the deck is stacked against you with the structure of a B2B debt, and you might not be able to get money from a business during their slow season, you should still make an effort to initiate a collections process. During this process, you will want to make sure that you do everything “by the book” so that you continue to position yourself as a partner to the business, rather than an adversary.
Stay in compliance with all of the same laws you would observe if it was a personal debt, and direct all of your communications towards the business, rather than any one specific person.
Filing for a Judgement
If the business fails to respond with an acceptable plan in your eyes, you are going to have to start the legal process of obtaining a judgement against the business. Legal proceedings against businesses can be a little more tricky than they are against individuals, so this would be a good time to contact an attorney or hire a commercial debt collection agency.
