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Small Business and the Pitfalls of Not Collecting Your Receivables: How Best to Protect and Collect Your Outstanding Receivables

Posted On: April 07, 2014

The Internal Revenue Service estimates that about 99% of all businesses in the United States are “small,” with fewer than 500 employees. There are approximately 30 million businesses with fewer than 10 employees, making small business one of the driving forces of the United States economy. Unfortunately, at one time or another, nearly every one of these businesses has likely dealt with collections issues.

It can be tough for small business owners to deal with debt collection because they do not have the same resources available as do large corporations. Unfortunately, this often results in small business owners giving up and not pursuing receivables to which they are entitled. There are ways to protect and collect these receivables without it taking up significant time and resources, but you first need to understand legal debt collection.

Having a written contract, Invoice or memorandum of the transaction is important
Having a written contract is important. A written contract makes enforcement of the debt easier. Including a provision in your contract or invoice for recovery of interest, collection costs and attorney fees can be extremely important to your bottom line when choosing to pursue outstanding receivables. Especially in states like New York where recovery of these additional costs must be in writing. Adding the costs of collections to the original debt can make recovery of outstanding receivables more profitable for your business.

Older Accounts are More Difficult to Collect
The longer a debt goes unpaid the more difficult it is to collect. However, certain debts typically take longer to recover than others even when there is no problem. Government accounts and medical accounts typically take anywhere from 60 to 90 days to receive payment, so as a small business owner faced with either situation, you can hold off on contacting a collection agency or taking legal action in these cases.

One of the biggest challenges faced by small businesses is their lack of an official collections department. The business’s accounts receivable clerk is also its collector, which means collections are not their only priority. Sometimes, local credit bureaus offer free support for small business, but this is not always the case and might ultimately not be that much more efficient than just muddling through.

Many times handing your matter over to a collection attorney sooner will enable a debt to be collected before it becomes truly uncollectible.

Another problem small businesses sometimes have when it comes to collecting receivables is not understanding their state’s Check Law. Before accepting checks as payment and before pursuing an unpaid account, be sure you understand your state’s laws governing the procedures for accepting checks.

Establish a System
If you are looking for a simple, organized method with which to deal with collecting receivables, put the following procedure into place:

  • At 30 and 60 days past due, send out past due payment notices. In addition to written notice, phone calls should also be placed.
  • If no arrangements are made for payment by 90 days past due, you can send out a pre-collect notice with various options. This tells the debtor you are flexible, but that further legal action should be expected soon if the account is not settled.
  • If there is still no action, you can either turn the account over to a collection Attorney or take the account to court yourself. Pursuing a debt through litigation can be time consuming, but it is often the best way to recover what is due to your business. Using an experienced attorney will also reduce the time you will need to spend on trying to collect the debt

    If you are struggling with collection of receivables or you have questions concerning your rights as a small business owner, contact an attorney that specializes in debt recovery and collection.

    If you need help in this area or have question contact attorney SPIRIO at 631-277-8844.
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The Biggest Investment of Your Life: What You Need to Know about Purchasing Your First Home

Posted On: March 28, 2014

According to US Census data*, homeownership rates have steadily increased in the United States over the last century. In 1910, approximately 46% of families owned a home. By 2000, that number had increased to more than 66%. In some states, nearly three-quarters of all adult citizens own homes. Chances are, if you do not currently own a home or you have not begun searching for a home to buy, you will do so in the next few years. The real estate market tends to ebb and flow, making housing one of the most solid investments available.

If you have made the decision to purchase your first home, what do you need to know?

Working with a Real Estate Agent can be a Smart Move
As a first time homebuyer, you might be tempted to “go it alone.” You have no house to list and sell, so your main priorities are finding a home, making an offer, and securing a mortgage. It is possible to do this without the assistance of a real estate agent and there is tremendous access now through the internet. However you can use an agent to help focus your search so you are only looking at homes that fit your wishes, desires and absolute necessities.

Most new homebuyers are under the impression they must pay an agent a fee to help them buy a home. The truth is the buyer’s agent is paid from the commission of the seller’s agent. So while you might think you do not need an agent to help you buy a home, you can benefit from an agent’s expertise and it will not cost you any money. However you must be aware that the real estate agent represents the seller’s interests. Therefore it VERY important that before you sign a binder or offer you consult an attorney.

Finding the Right Home Can be Tough
If you have begun your search and have yet to find the home of your dreams, do not despair. Finding a perfect home is nearly impossible. Most homebuyers are forced to compromise, but smart homebuyers know what compromises to make and which things to hold firm on. If you are able to find a home you like in your price range in your ideal location, consider yourself very lucky. Expecting to find a home with every feature on your list or haggling over small cosmetic issues can extend your home search and cost you a home that makes you happy.

Mortgage Pre-Approval Should Be Your First Step
Many new buyers assume they should begin their home buying process by searching for a home. Though it does not hurt to browse homes on the Internet, you should apply for mortgage pre-approval before you begin your official search. Not only does this allow you to know what you can afford, it lets sellers know you are serious and capable of buying their home. It is also important to understand your own budget and the total costs involved in purchasing your new home.

Importance of Having an Attorney
Purchasing a home for most people is the single biggest investment they will make during their lifetime. It is important to have an experienced attorney guide you through the process. An attorney will represent you through negotiating all the terms of the contract to purchase the property, the signing of the contract through the actual closing of title, when all your mortgage papers are signed and the house officially becomes your home. There are many things involved in type of transaction from beginning to end so it is important that you have an experienced attorney at your side that you trust and feel comfortable with.

First time home buying can be stressful, but it is also very exciting. By planning ahead and making smart choices, your home buying experience can be one that you remember fondly.

If you need help in this area or have questions feel free contact attorney SPIRIO at 631-277-8844.

* http://www.census.gov/housing/hvs/files/qtr413/hown413.png
* http://www.census.gov/hhes/www/housing/census/historic/owner.html

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