Assisting Our Clients as They Collect on Debts Owed by Other Businesses
To succeed, every company must carefully balance its costs with revenue. However, when you look at your profit and loss statement, you may notice that some losses are not attributable to regular operational expenses but to money owed to you by other companies. These extremely frustrating losses can exist for an unnecessarily long time.
Companies rely on invoices paid by individual customers for their goods and services. However, many companies have other businesses as customers as well. With 2.6 million small businesses throughout Texas, it is no surprise that many of them work together and rely on one another.
Other business owners should understand the importance of prompt payment of invoices, as the failure to pay can throw off your budget and operations. Unfortunately, many business owners try to avoid paying debts by making excuses or ignoring the matter altogether.
While you are focused on managing your employees, overseeing operations, and reconciling your books, the last thing you want to worry about is pursuing collections from stubborn companies you know are reluctant to pay. Keep your attention on your business while you let The Weisblatt Law Firm, LLC, handle your business-to-business debt collections.
What is B2B Debt Collection?
B2B debt collection is collecting unpaid debts from business owners. These transactions involve providing goods and services with the expectation of payment from the debtor. When the debtor fails to pay the debt on time, you must take steps to recover the outstanding balance. We use numerous tools, including negotiating payment plans, sending reminders, taking legal action, and working with debt collectors.
A Unique Approach to B2B Collections
Many companies must work together with other companies, providing goods and services in exchange for payment. Whether you are a vendor, consultant or provide other benefits for businesses, your clients must pay their invoices promptly so you can keep your business on track. Unfortunately, as you probably know all too well, not all clients make payments as they should.
You likely have tactics to collect from individual consumers, and may feel tempted to use those same collection methods to collect B2B debts. However, several key differences separate consumer and B2B collections, and the same approach often doesn’t work. Our law firm has unique strategies to collect business debts on behalf of our clients.
First, debts from other companies tend to range into greater dollar amounts than debts from your individual customers. While consumers may make single purchases, business clients may buy bulk products or ongoing services. For this reason, business-to-business debts can have a greater effect on your bottom line—and could even jeopardize your company’s success in the case of substantial clients.
Not only are you not receiving the funds those businesses owe, but those clients have likely halted further orders since they know they are behind on payments. You are losing that future revenue as well. Never delay pursuing assistance with B2B collections, as it can help you get your budget back on track.
Businesses also may prove more stubborn and calculating when evading B2B debts, sometimes permanently. For example, a business owner may know the serious financial problems of the company and may suspect that a Chapter 7 bankruptcy is in the company’s future. In this case, a debtor may work to delay any payments while filing for bankruptcy and wrapping up operations. In this case, you will likely never see a dime after the business closes.
This situation is more common than you might think, as many owners choose to shut down the business instead of continuing to accrue debt.
Because B2B collections are unique, never hire a consumer collection agency to collect debts from business clients. Instead, contact Houston attorney Andrew Weisblatt, who understands how to approach B2B debt collection effectively.
What are the Challenges of B2B Debt Collection?
B2B debt collection offers unique challenges for unpaid debts owed from one business to another. Here are some of the most common challenges.
Communication issues: Businesses working across the globe are operating in different time zones. Reaching out is more challenging when you are in a far distant location.
Language: Translating different languages could confuse the other party’s intentions. The situation becomes worse when you consider the styles and forms of communication. These factors can lead to a communication breakdown, making it more difficult to collect from the debtor.
Payment disputes: The debtor could be disputing some aspect of the debt, such as its accuracy, completeness, or double billing. These situations could lead to prolonged negotiations and pending legal action.
The debtor is facing financial challenges: The debtor wants to pay you but lacks financial resources or ability. They are ashamed and struggle to find a way forward.
Preserving the relationship: The creditor could continue doing business with the debtor. They are reluctant to engage in aggressive collection measures that might damage this relationship.
Bankruptcy: The debtor is preparing to file for bankruptcy and is stalling. They could reorganize to get the outstanding balance discharged or reduced by going into default and negotiating. A bankruptcy filing gives them more leverage in these situations.
Cultures: Different cultures have contrasting attitudes about debt and what it means to honor a legal obligation. These beliefs could impact how quickly you receive the money and the total amount.
These are some of the challenges of B2B debt collection. Your actions will decide whether the relationship continues or if a negotiated settlement is necessary.
The B2B Debt Collection Process
Collecting a debt requires following different steps that get results and adhere to the law.
Contacting the debtor: The debtor receives letters, emails, and phone calls requesting payment.
Reminders: A reminder goes to the debtor that includes the due date and outstanding amount.
Negotiations: A payment plan acceptable to both sides is a preferred option. We work to negotiate a solution that is acceptable to everyone.
Legal action: Legal action is the last option after the debtor refuses to pay. These include hiring a debt collector and filing a lawsuit for damages.
Enforcement: After getting a favorable judgment, steps are taken to enforce it, including garnishing wages and seizing assets.
All debt collection practices must follow the appropriate laws and regulations. The process is complex and time-consuming; we recommend consulting with a skilled attorney who can guide you.
Helping You Preserve Relationships When Possible
When companies seek to collect debts from consumers, they likely have no desire to preserve a relationship with that consumer. Therefore, consumer collection departments and agencies often use harsh or even harassing tactics to seek payment.
You want to take a different approach with your business clients, especially those who may once again put in substantial orders when their budgets are back on track.
At The Weisblatt Law Firm, we approach business-to-business collections with the preservation of relationships in mind. First, we never use harassing or unprofessional tactics when communicating with your business clients. We keep everything professional so as not to affect the image of your company at all—because we are representing you.
Many B2B collections begin with a demand letter. Sometimes, all it takes is a letter from an experienced business attorney to convince an owner that you are serious about collecting the debt. The company may want to avoid any further legal action and may reach out regarding the debt after receiving the letter.
In some situations, a company will experience a temporary setback or loss of liquidity, preventing it from paying the debt right now. We may agree that the company can make lower payments or devise an installment plan instead of paying the debt in full all at once. Receiving any payment is preferable to receiving no payment, and the business may fulfill its obligations once it is in a better position to do so.
Finally, some B2B collection cases require taking legal action. You want an experienced litigator handling the case who knows how to file and pursue an effective lawsuit against the company.
Contact Our Houston B2B Debt Collection Attorney for Assistance Today
If you are a business owner entitled to payments from another company, the road to collecting that debt can prove difficult—especially if that debtor company knows how to evade payment. You should focus on running your business, not on continuously struggling with other businesses for payments.
Allow a Houston business attorney to pursue payment of B2B debts on your behalf. Please do not hesitate to discuss your situation with The Weisblatt Law Firm, LLC. Call (713) 666-1981 or contact us online to discuss how we can assist you today.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
