t is never a good feeling when someone owes you money. In the worst-case scenario, you may have to take legal action to get your money back. However, this doesn’t mean that there are no other options available to reclaim the money.
First, calculate how much the person or business owes you and go through the payment agreement.
The debt collection method will depend on how much is owed, your relationship, and the agreement’s terms. Here are a few scenarios to help you collect your debt fast.
When a Business Owes You
Business debt typically occurs when a client buys goods on credit but does not pay. You have a few options for collecting the debt, but first, send them a reminder letter followed by a demand letter.
When the payment is overdue with a few days or weeks, send the business an invoice along with your contact information to remind them that they still owe you money; this is more of an informal request.
If the payment is more than a month overdue, send the business an invoice along with your contact information and state that if they do not pay within 30 days, you will be taking legal action.
If they still don’t honor the demand notice, go ahead and consult legal experts in your field. For instance, when dealing with cannabis-related debt, cannabis debt collection experts might be the ideal choice. They understand the industry better and know how to get you the money owed without destroying your relationship with the client.
When Someone Owes You Money for Personal Use
It may seem like there are no options available for personal debts owed to you but to take legal action. Before you file a case, think of informal ways to initiate the debt collection. You can involve mutual friends, a respectable member of society, or a lawyer. This is after asking your friend or relative to honor the agreement terms, but they’ve failed to do so.
Let Your Payment Terms Be Flexible
When someone owes you money for a service or goods, let your payment terms be flexible. If they cannot pay on time but can afford to make monthly payments, negotiate a new agreement. This will enable you to collect the debt in installments that work best for both of you.
The same goes when a friend owes you money but cannot pay all of it at once. The new agreement will protect your relationship and enable you to recover the owed cash.
It’s also good to check your friend’s or relative’s financial well-being as you request the debt payment. If you feel their financial situation has not yet improved and you can wait a bit longer, extend the payment period. You can also think of reducing the loan interest rate if you had one.
To avoid such problems in the future, learn to say no, and when you see a client struggling to make timely payments, be more careful about extending credit.