Collecting On Debts

Protect yourself now so you can collect later.

Do you have collection protection? Your ability to collect on past-due bills may depend on the language in your sales documents. Have an attorney-preferably one who specializes in creditors' rights-review your documents, including credit applications, sales contracts, invoices and statements, to be sure they conform to your state's regulations. First up: Make sure your invoices state when the payment is due.

If you offer terms, you must clearly state the interest rate and conditions under which interest accrues. In some states, customers must agree to this in writing; find out if this applies to you. Also, stipulate that if there is a problem, the debtor is responsible for paying any attorney and collection fees.

Do yourself a favor: Protect yourself now, and collections will be much easier later.