Money makes the world go round, and without it, you're not going to last in business for very long. You've got to pay attention to debt collection right from day one, and you cannot let any larger debts go unpaid, ad infinitum. In fact, if you are very tardy about chasing any outstanding money, you may have to worry about your legal ability to do so. What should you be aware of, if you've been hanging back?
The law provides for a statute of limitation, which dictates whether or not you can legally claim any funds that may be due to you. These laws can vary from state to state, and you have to be aware of the various clauses in order to know if you can proceed.
One particular rule requires you to have proof that the customer has "acknowledged" the existence of the debt and is thereby aware of it. If not, the statute of limitations may not even apply. You need to get the customer, or somebody who is acting on their behalf, to acknowledge the existence of the debt and ideally get them to document that in writing. Not only should they be aware that the debt is there, but they should clarify that it has not yet been paid.
Typically, the statute of limitations relating to a debt begins on the date when the money becomes due and payable. If it's overdue because the terms of the contract have not been adhered to or certain instalments have been missed, the clock will be ticking. You should know that when a customer acknowledges the outstanding money, any limitation can be extended, and this will also apply if they happen to pay any of the money "on account."
How Long Have You Got?
Usually, you will only have a few years to seek payment of funds under a simple contract before the statute of limitations rules it out. However, if a court has issued a judgement against the debtor, then you may have longer to pursue the collection.
If things have been going on for a long time and the limitation period has ended, you may not have many options available to you. Some states or territories will determine that there is no longer any debt, and you will have to simply wipe it from your books, but you may have certain restricted options in other places.
Time to Get Moving
If you have any debts outstanding, you should take action to pursue their collection right now. If you're worried about the statute of limitations with regard to a particular case, you need to get professional legal advice to see exactly where you are. To get help in pursuing money, bring in a qualified debt collection service to supercharge your efforts.