Overdue...Debt Collection Strategies

Best Practices for Debt Collection in the Sanitation Industry

Getting and receiving payment for goods and services is what makes the world go round in business. But what if a client refuses to pay their invoice? It doesn’t happen that often, but when it does, depending on how large the debt is, it can throw your books off or, worse, your world if the debt is large enough. This article will focus on credit collection strategies for dealing with a customer who is not honoring their end of the deal.

Client research

Client Research

First things first, take the time to research a client before taking them on. Good credit collection strategies start before you even take on a customer. Visit the website or call the Better Business Bureau to check any reviews or complaints of your potential customer. You can also see how many years your new customer has been in business. Check Yelp reviews to inform you if customers are generally happy with the company you plan to take on.

You can also search to see if a company has been involved in lawsuits. To do this, Just type “v company name” into the Google search engine (ensure to include the v and quotation marks) to show any public records of legal cases. The details listed within the lawsuit records will inform whether you want to do business with them. If at this point, you still don’t feel secure with invoicing, you can ask for payment upfront. You can persuade your customers by directing them to past-happy customers who will vouch for you as a reliable business.

Non payment

Non Payment

A client has missed the due date for payment; now what? There are many reasons why nonpayment happens; for example, a wrongly entered invoice or accidentally mailing a check to an old business address. In most cases, a simple reminder in the form of an email or phone call will set things straight.

Be respectful and polite when asking for payment. Mistakes can happen to anyone. Tell the customer when you can expect the payment and write it down. You must track this account closely to ensure compensation by the new proposed date. If they miss the new proposed date, you will need to reach out again. It’s essential to approach your customer with an understanding of their situation. They may be going through a rough financial patch for which they need some breathing room.

You want your customer to bounce back to good financial standing and return to regular payments while at the same time keeping your cash flow healthy. Now is the time to extend a payback plan of many smaller amounts to shore things up. In addition, you want to explore anything that will keep the relationship good with the customer and avoid losing the customer forever to the debt collection process.

Demand Letter and Collections

The Demand-for-Payment Letter

After some time, if it is clear that your customer has stopped communication or will not be able to pay their due amount, it is time for the demand-for-payment letter.

The demand-for-payment letter turns up the heat. This demand letter means that you have considered an attorney, and it formally outlines the debt owed and states the legal outcome if payment is not met within a deadline. The scare of legal action will motivate some to find the funds to pay up and rid themselves of the debt. The demand letter should:

  1. Inform the business that you have a debt collection attorney.
  2. Provide an opportunity for the business to take exception to or challenge the debt
  3. Provide alternative solutions to resolve the debt, such as partial forgiveness or a payment plan.

Debt Collection Agency

Now, suppose you find that any attempt to extend payment solutions fails after 90 days past due. In that case, you must decide whether the balance is large enough to seek payment through a collection agency. You will see only a percentage of what is due because you must also pay the agency; however, selling your debt to the agency is even more expensive because they now take on the debt themselves.

You will need to research different collection agencies to ensure that the one you hire represents you well in how they obtain payment. A debtor can sue a collection agency and your business if the agency uses shady tactics. Some collection agencies are geared toward larger enterprises, while others are better suited for smaller operations. Choose the agency that most aligns with your size and style of business.

Small Claims Court

A lot goes into hiring an attorney. First, you must ask yourself if the debt owed is worth the time and energy that goes into filing a claim. If a large sum of money is due (many states require amounts over $2000), and neither you nor the collection agency resolves the due amount, small claims court is the next step.

Small claims court, or conciliation legal proceedings, generally deal with claims of $15,000 or less (check with your state), and a judge will officially decide who is the judgment creditor and the judgment debtor. Once the judgment is made, the debtor has 30 days to file an appeal. If a debtor files an appeal, a new review is necessary. On the other hand, if no appeal request is filed, the judgment debtor is legally obliged to pay the creditor.

Collecting on a Judgment

Unfortunately, just because the court determines who should pay who doesn’t mean that the debtor will pay. so, enforcing a judgment requires more steps. A debtor’s financial disclosure or a formal asset examination follows. The debtor’s financial disclosure will lay out the debtor’s assets, everything from cash, checking, and savings accounts to personal property, including homes, vehicles, and jewelry. In addition, If the debtor does not give financial disclosure or appear for an ordered examination, the judge can issue an arrest warrant.

After the ordered asset examination is complete, you can pursue payment by garnishing the debtor’s wages, taking cash or assets directly from the businesses the debtor owns, or seizing the real estate or vehicles.

There are several ways to collect a judgment. Read here to explore the scope and depth of judgment collection. In a nutshell, there are two ways to proceed. Either you can perfect a real estate lien or try to seize business or personal assets with the help of law enforcement.

We hope you never have to collect on a debt, but if you do, we hope we’ve helped you to become more mentally prepared with strategies to help you make a plan.

To read our series on credit card processing and digital payments for sanitation businesses, click here.


Annie Sisk, J. (2020, February 13). Retrieved from Legal Beagle: https://legalbeagle.com/4447260-check-companys-business-reputation.html

Freedman, M. (2022, 6 29). How to Collect on a Judgment. Retrieved from Business News Daily: https://www.businessnewsdaily.com/16051-collect-on-a-judgement.html

Post, J. (n.d.). Does a Client Owe You Money? Step-by-Step Tips for B2B Debt Collection. Retrieved from Business.com: https://www.business.com/articles/the-business-to-business-debt-collection-process/

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