Liens Are Just One Way To Collect Debt – Other Best Collection PracticesOn August 26, 2010 By Scott Wolfe Jr
I love a great article about collection practices. Not only is a topic I’ve written about in the past (see posts from the Construction Lien Blog here, and from the this blog here), but it’s one of the more important topics for those in the construction industry.
Consider a “bad debt calculator.” I love these types of calculators, because it puts the tragedy of bad debt in your face. Take a modest amount of bad debt ($25,000), and a candid profit margin (5%), and you’ll see that it takes $500,000 of revenue to recover the lost income. Amazing.
Last week, Melissa Brumback’s Construction Law in North Carolina blog posted a blog post with “8 Best Collection Practices.” The article does a great job of hitting on the things you can do to minimize your bad debt – and things, that we’ve even said over and over: Be careful when extending credit, have a written contract, and don’t let too much time pass before implementing your collection procedures.
These, of course, are just a few tips. The post does a great job of enumerating each tip and discussing their importance, so there is not need for me to regurgitate it here…just take a look at Melissa’s post for more.