After providing your products or services to a customer, you expect payment in a timely manner. When a customer fails to pay your invoices, your business suffers. Even though most people work out their payment issues, some continue to deny payment, and your business needs to know its options for collecting payment from those parties.
What are the most often used collection methods?
Like many other Nevada business owners, you more than likely do not run directly to court when someone owes you money. Instead, you attempt to work it out on your own. If those efforts fail to bear fruit, other measures might work.
- You could hire a debt collection firm or agency. Many attorneys and companies handle debt collections on behalf of your business. This type of debt collection falls under the Fair Debt Collection Practices Act, which provides guidelines for contact with the parties that owe you money.
- If you claim a right to property you sold to your customer designed to ensure payment, this establishes you as a secured creditor, which means you take priority over another creditor whose extension of credit does not come with any security. For example, if you sold a non-paying customer a car, and the vehicle secured the loan, you reserve the right to retake the vehicle in lieu of payment.
- If you fear your customer will destroy or otherwise dispose of the secured property, you could ask the court for a replevin or attachment, but courts only allow these measures under certain conditions.
- The next step requires the filing of a lawsuit to collect what your customer owes. If the evidence supports your claim or your customer fails to respond to the lawsuit, the court issues a judgment upon which you can collect.
- Judgment liens or materialmen's and mechanics liens might also provide you with a way to receive payment from your customer.
- If your customer owes a significant amount to numerous creditors, an involuntarily bankruptcy could be initiated. With the court's approval, the trustee sells the customer's assets to help pay debts owed to you and others.
A judgment allows you to take advantage of legal methods of collection. A small business might not be able to initiate an involuntary bankruptcy, but the other methods could produce the desired results. To help ensure your success, it would be beneficial to talk to an attorney. Finding an attorney who understands the laws of collecting debts using these methods provides you with the information and assistance you need to deal with a non-paying customer.