Though business-to-business (B2B) transactions are oftentimes uniquely rewarding, they can also be especially challenging. The rules and regulations governing B2B relationships are quite different than those governing business-to-customer (B2C) ones because B2B players are generally considered to be more sophisticated than B2C players.
In particular, collection of debt differs in the B2B scenario. If B2B relationships sour, the rules of the collection game may be entirely different than what you are used to in an ordinary B2C relationship.
In the B2B setting, the phases of collection are generally divided into two categories – the pre-collection and collection phase.
This is an important phase that includes the initial fact gathering on the business. You should have an in-take sheet that gathers all-important information for the other business. This stage includes sending out notices and filing liens in a timely and proper manner. An integral part of the pre-collection phase is having a good contract drafted up, with specific default and attorney fee provisions.
This typically has four components to it:
Just like with other types of debt collection, you should begin with a demand letter. In Louisiana, this letter should include the Louisiana Open Account Statute language. The demand letter is extremely vital and may lead to voluntary compliance. We recommend hiring a commercial debt collection attorney to send the B2B demand letter so that it is properly drafted, properly sent out and is taken more seriously. Your demand letter should inform the other business that an attorney is trying to collect on past-due debt and give a reasonable time to respond. You may also want to consider incorporating alternative dispute resolution options.
B2B collections are not restricted under the same limitations and regulations as B2C collections. Thus, many investigative routes may be used to secure payment, track location and uncover hidden assets. Speak to an attorney today to see what investigative methods are legal in your particular jurisdiction.
Debt Recovery Litigation
After the demand letter is sent out and thirty (30) days elapse, then it is time to file suit against the debtor. Depending on the amount of your debt, your attorney will likely take your case on a contingency basis, which will hopefully minimize litigation costs. You may need to provide relevant evidence to the court to prove that your claim is valid and accurate. Such evidence may include invoices, account statements, and signed contracts. Always make sure to keep your records neat and orderly. You never know what you may need and when you need it!
If you secure a judgment in your favor, there are a number of ways to collect. We recommend contacting an attorney to here about all the available options.
Contact the attorneys at Smiley Law, for all your B2B collection needs.