Small businesses rely heavily on every bit of traffic to their stores or commercial buildings, and to their websites. When they have customers that don’t pay for goods and services, their businesses suffer. If your small business operates in and around Boston, Massachusetts, there is a debt law firm that can help you collect your “small” debts and get paid. Here’s how it works.
Make Every Effort to Collect the Debts on Your Own
If a consumer hasn’t paid for goods or services, you need to pursue that on your own until there is just no way you can extract the money. For example, a consumer purchases website hosting services from you. You bill that consumer. Then you send a second bill after two weeks. After a month, it is considered past due, and you should be issuing past due notices. Attempt to contact that client a few times by phone, by email, and/or by mail.
It is important that before you bring these small debts to a lawyer that you have made every good attempt at collecting the money owed yourself. Your lawyer, and the courts, need to see that you did your “due diligence” and that the defendant(s) ignored your requests for payment. When a client or consumer ignores a request for payment and you have records reflecting that, it is easier to get a judge to rule in your favor than if you had made almost no attempt at all to collect the debt yourself.
Bring All Debts of Less Than $10,000 to the Debt Law Firm
When you have exhausted all efforts to collect debts from consumers and have received nothing, contact a lawyer. Arrange a consultation and be sure to bring with you the names of the debtors, the amounts owed, and the proof of how often you have tried to collect these debts. Discuss your case with the lawyer. He or she will examine what you have brought and then let you know if he or she would be willing to take your case.
If the attorney is willing to take your case, you will also need to provide the retainer fee. Most lawyers take all forms of payment, which is convenient as most retainers are not representative of the cash small businesses just have laying around. Additionally, the amounts owed should be about $10,000 or less, with most of the debts being about $5,000 or less as defined by “small debt”.
As for other legal fees, that depends on the firm. Some work on contingency and take a third to a half of all monies recovered. Others take a smaller percentage with a flat rate. If you intend to keep the attorney on retainer, it might be possible to contractually negotiate the lawyer to a lower contingency percentage based on the expected high volume of future debt defaults by consumers.
The Attorney Drafts a “Demand for Payment” Letter
A lot of small business owners tend to laugh about lawyers drafting a “demand for payment” letter because, after all, the business owners have already done that and tried that. The difference, of course, is that an attorney’s letterhead and letter seeking payment for what is owed is generally viewed by the other party as a “nice threat.” It is a very cordial way of letting the debtor know that the business owner has hired legal aid to get the money owed, and that further legal action may ensue if the money isn’t paid.
A letter for each person owing any money to your small business is drafted and sent. If you’re lucky, most of those who owe you money will pay it upon receipt of the attorney’s letters. If you are not so lucky, they will ignore the letters and legal action will begin.
Of course, there is an alternative. The debtor can request a payment plan. If you are willing to accept this payment plan, the payments can be routed through the attorney’s office, deducting the attorney’s collection fees before being passed on to you in the form of a check. A lot of small business owners are so frustrated by the time they hire a collections attorney that this option often appeals to them. The business owners don’t have to do much else but wait for the collected debts to come into the attorney’s office and a check to be mailed to the business owners.
Results Are Quicker Than If You Tried for Months on Your Own
While it is advisable that you try to collect your debts owed, you shouldn’t have to wait months, or years even, to accomplish it. By hiring a collections attorney you are able to get that money into your business account before the lack thereof negatively impacts your business. Your Boston, Massachusetts small business can’t survive on bread alone. You sometimes need the help of a good attorney to keep ahead of closing your doors.
Don’t try for months to get money that is owed. For a small business, a month or two is typically cutting it too close financially. Do what is expected of you to collect the money first, and then waste no time hiring an attorney to collect your debts owed. By hiring the attorney within a month after you have done all you can, you will get paid a lot sooner.