Preventing bad debt is an ongoing headache for many businesses. Bad debt, uncollectable debt, and refusal to pay are unfortunate hassles that every business must face. The definition of bad debt is debt resulting from a credit sale that for whatever reason cannot be collected by the creditor. You never can tell who are the good customers vs bad customers until you have to send out multiple notices demanding payment. Doing so can be trying and time consuming work, which is why partnering with a business debt recovery agency can be a great way to find debt recovery solutions and get the money you are owed.
Some business owners are concerned about the cost of turning over bad debt to a collector. However, there are many debt recovery solutions available to businesses at different price points. For example, you can pay a collection agency a one time fee to write a series of collection letters on your behalf. This tactic is not the same as turning over the debt to an agency, and it might be one of the best debt recovery solutions for your small business. As well, there are two common methods of accounting for bad debts. One is the allowance method, and the other is the write off method. When you work with a debt collector to find debt recovery solutions, the collector can counsel you as to which method would be most profitable for your company.
One issue that necessitates innovative debt recovery solutions is when a debtor files for bankruptcy. Unfortunately, bad debt recovery can be quite difficult in this instance as it is unlawful to send correspondence to a person or company in bankruptcy regarding their debt. However, even in this situation, debt recovery solutions can be found. Creditors are permitted to attend bankruptcy hearings in order to make their case regarding why the debtor is still liable to pay back the creditor. This tactic does not always work, but it can be one of many possible debt recovery solutions.