Ensuring collection of receivables from clients and customers is a growing concern of most businesses today. This is an appropriate time to review your existing customer contracts to ensure that your agreements include up-to-date and appropriate terms and provisions to deal with the growing risks of slow-pay and no-pay from customers and clients.

New Clients or Customers

When taking on a new client or customer, it is a good practice to do some due diligence on the prospective customer. If you are extending credit, this may involve a formal background or credit check. Once you have signed up the new customer, clearly explain your billing and invoicing process, and follow your own procedures for regularly issuing timely invoices.

customer Contract Updates

Our business attorneys can review your standard customer contracts and suggest changes to ensure that your contracts are up-to-date with terms and provisions designed to preserve your rights as a creditor and maximize your flexibility and remedies for dealing with slow-pay clients. For example, your updated contract might include:

●          Payment terms requiring full or partial payment in advance or payment upon delivery

●          Security interests in specific customer collateral

●          Stricter representations, warranties and covenants

●          Interest, late fees or other penalties upon default or delinquent payments

●          Liquidated damages for default or breach of contract

●          Attorney fees for the prevailing party in any breach of contract dispute

●          Clear billing and invoicing policies and procedures

●          Terms providing for third-party collection upon default or delinquency

●          Self-help remedies upon the customers default

STRATEGIES FOR DEALING WITH SLOW-PAYING CUSTOMERS

If existing clients are customers are behind on their payments, provide them with timely reminders that they are behind on their payments. Be sure that invoices and late payment notices are accompanied with personal communication.  The sales representative or relationship partner who established the client or customer relationship should use that relationship with the customer to communicate the importance that customer pay the outstanding invoices. Where appropriate, consider establishing a payment plan to get the customer current on payments. If the customer remains delinquent after reasonable attempts to collect the late payments, it may be necessary to resort to using a commercial debt collector, or having an attorney issue a legal demand for payment.

CREDITORS RIGHTS

Our commercial collections attorneys represent lenders and other businesses in commercial collections compliant with the Texas and Federal debt collection laws.  Our attorneys are experienced in all stages of the collection process from the initial demand letter through post-judgment collection of judgments.  We also routinely defend our clients against the various defenses typically asserted by borrowers such as fraud, usury, and Texas constitutional defenses.

CONTACT US

To speak to an attorney about updating your commercial contracts to deal with slow-pay customers or to exercise your legal rights as a creditor, please contact us here, or call us at 713.650.9700.

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