How to Collect Business Debt and Unpaid Invoices

Have you ever worked with customers who can’t seem to pay their bills on time? Despite your best efforts, reminders, and more, your invoices never get paid. When this happens, it’s time to consider commercial (B2B) debt collection. But don’t freak out! We’re not talking about a scary debt collector knocking on your customers’ doors. In fact, B2B debt collection is very different from consumer debt collection.

Monetaria is here to help with some best practices for navigating the debt collection process and taking advantage of the best debt recovery resources. Don’t let missed payments hold your business back, and learn how to collect what you’re owed in an ethical and efficient manner.

Why do we need commercial debt collection?

Unpaid invoices can have a huge impact on your business, including reduced inventory turnover and cash flow, damage to your company’s reputation, credit ratings, and overall financial health. To maximize your chances of recovering unpaid debt to your business, it’s important to take action as soon as possible. 

Overdue invoices need to be addressed within the first 45 days following the due date. The longer an invoice remains outstanding, the harder it is to collect. Most terms request payment within 30 days, so if an invoice remains unpaid for more than 60 days, it’s considered a bad debt and requires commercial debt collection. 


B2B debt collection by yourself

Before reaching for an outside research, it’s always a good idea to try reaching out to your customer directly first.

  • Telephone calls have proven to be the most effective technique for business debt collection. By making a personal connection with the customer, you have a better chance of having your invoices take priority over other payments.
  • Debt collection letters can serve as more serious reminders stating the unpaid invoice, requesting prompt payment, and advising of more action to come if non-payment continues. 

B2B debt collection isn’t only about the money owed; customer relations and the time and energy you will spend collecting the debt should also be taken into consideration. Sometimes it’s better to write off small invoice amounts for the sake of preserving a business relationship. Ask yourself if it’s worth chasing a small amount that’s going to cost more in time and resources to collect.


External options for debt recovery resources 

If your independent collection efforts are unsuccessful, it’s time to look at external help. Such assistance might include:

  • Engaging with a commercial debt collection agency
  • Partnering with a trade credit insurance provider

What you choose to do will depend on the debt, your business, and the relationship you have with the debtor. Consider your options carefully and choose the one most likely to result in a satisfactory outcome. 


What are Your External Options for Business Debt Collection?

If your efforts to collect business debt on your own are unsuccessful, you may need to consider seeking external help that may include;

  • Engaging a business debt collection agency 
  • Partnering with a trade credit insurance provider.

Your best option depends on your debt, business, and debtor relationship. Consider your options carefully, then select the one that will most likely result in a satisfactory outcome.


Working with a business debt collection agency

Business, or commercial, debt collection agencies specialize in collecting commercial debts on behalf of a wide variety of businesses. Their goal is to collect the full balance from the debtor while trying to avoid litigation. The agency usually doesn’t own the loan. Instead, it will act as a middleman between you and the customer, taking a percentage of the collected amount for services rendered.


Debt collection with trade credit insurance

Partnering with a trade credit insurance provider can also be a great solution to your commercial debt issues. Trade credit insurance safeguards your cash flow by covering your receivables due within 12 months against unexpected commercial risks. If your customers become insolvent or fall into protracted default, you are indemnified for the value of goods and services you have delivered.

Debt collection management is an eventual responsibility of all business owners. The outcome depends on how you approach it. Maintaining good customer relations and cash flow requires prompt yet strategic action. At Monetaria, our experts are equipped to help you through all stages of the commercial debt collection process and find the best debt recovery resources for you. Reach out to us today for help navigating these challenging issues, and get back to running your business.  


We’re happy you found this article informative! Go back to our blog page to find more tips, tricks and guidance on collections, to ensure your business gets paid.

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If you have unpaid debts that need to be recovered, commercial debt collection may be a good option for your business. A commercial debt collection agency can help you with the process of recovering past-due accounts and provide guidance on best practices for managing accounts receivable. 

Led by a team of experienced commercial debt collection attorneys, Monetaria Group has helped hundreds of businesses recover and collect their outstanding debts and payments. Schedule a FREE consultation with our expert team to see how we can help you recover your money today!