Most people think lawyers cost them money. Actually, a smart businessperson can use an attorney to improve his or her cash flow.
Debt collection. The success of many small businesses hinges on positive cash flow. In a tougher economy, a slow down in receivables could be the end of the business. When customers or clients are in a bind, they prioritize who they pay. The business who sends out reminder letters for overdue bills via their attorney will most likely move to the top of that list.
In the event that the payments still don’t come, even after reminders and letters from an attorney, that same attorney can begin a lawsuit. It may seem harsh, but if you want your business to survive, you need to make sure you get to the top of the creditors list. If the person or business (the debtor) that owes you (the creditor) files for bankruptcy, the creditors who have judgments from courts will be at the front of the line to get whatever money or assets are left. Find yourself too far down the line and you can say goodbye to any financial recovery.
Complicated issues involving the Fair Debt Collection Practices Act may arise. You don’t want to violate any laws while attempting to collect a debt. It could lead to unexpected costs or worse. There’s a lot to consider when filing lawsuits and dealing with possibly bankrupt debtors, but having a reputation as a person who provides quality goods and services, AND takes seriously the issue of getting paid, usually has tangible benefits down the line.