Should there be another court shutdown in 2021, you may be wondering how to maximize debt collection in 2021?
New York on PAUSE in March 2020, closed New York courts for almost all debt collection efforts. The need to get paid to stay afloat was not considered urgent enough to bring an emergency application (the only type of debt collection effort that was allowed during the shutdown).
Since then, the courts have reopened. Many, not all, court clerks have returned, offering the opportunity to process debt collection claims.
Based on the events of 2020, are you taking the same steps or have you changed your internal and external procedures? Does the threat of another shutdown leave you wondering where to go and what to do to get paid in 2021?
If yes, here are some ways to maximize debt collection in 2021.
1. Return on Investment (ROI)
Measure your ROI on your debt collection. Strive for better by implementing changes to your internal and/or external processes.
2. Revamp Your Collection Policy
If you do not have one, get one ASAP. Make sure that the process begins with the sales cycle. If selling on credit, you are a lender. Make sure to avail yourself of all possible tools to collect starting with implementing changes in the sales process. Think proactively about including guarantees, confessions of judgments, liens, security interests, mortgages, and notes.
Thw time to think about collections is before you work with the customer.
3. Local, State, Federal, and International Rules and Regulations
Do you know of the laws that will affect your ability to collect? Are there licensing requirements?
If selling to a foreign entity, think about how you will get paid. Is there a restriction or limit on the amount of money that can be transferred from the customer’s home country to the US?
4. Customer Billing Requirements
Are you set up for billing through other portals? Do you have specific requirements including deadlines for billing or billing cycles? If you are unable to complete payment by a date certain, do you waive your right to recovery? These are all things you’ll want to consider.
5. Contract Terms
What terms, if any, are included in the underlying agreements governing your debt collection? Do the terms make economic sense for you to pursue bad debt?
Do you know what the costs are for you to pursue the debt and the time frame to do so? These are some questions your contract terms should clearly answer.
6. New York Courts and Alternative Dispute Resolution (ADR)
Do you know what’s going on in the state and federal courts that would affect your ability to pursue debt? Are you permitted to file? Will you be able to obtain a judgment? Can you testify virtually? Where should you pursue your client for payment? What are the advantages of suing in New York and obtaining judgment to then pursue in another state where debtor maintains their assets?
If you aren’t sure how to answer these questions. A debt collection law firm, like Frank, Frank, Goldstein & Nager will be able to help you answer them.
7. Understand the Laws
Be aware of any laws that govern the collection of your type of debts. In addition to a huge difference in the collection of consumer and commercial collection, know which statutes, laws, and regulations are applicable to your industry.
If you are extending credit terms or have your customer sign a promissory note, is the interest you are charging considered usurious?
8. Triage Your Receivables
Identify the collectible accounts and work on those immediately.
Prioritize the least-aged accounts first as your chances of collecting are better in the first 60 days.
9. Credit Policies
Revamp your credit policy. If you do not have one, establish one immediately. It doesn’t need to be complicated but should match your tolerance for risk and have a system in place to shut off credit to a customer who is in serious arrears. Stop financing your client’s business!
10. Know When Enough Is Enough
Know when to call it a day. That pertains to in-house and outsourced collection efforts. Do not spend more in time or in costs than is appropriate for bad debt.
If you need help determining your options, reach out to a trusted debt collection law firm like Frank, Frank, Goldstein & Nager. Our firm has been writing about debt prevention, collection, and defense for the past decade. Learn more about debt collection by searching our blog.
To maximize your debt collection efforts, contact Frank, Frank, Goldstein & Nager. We have the experience that pays.