Author: Michael Lebovic

Today we’ll discuss another reason why you should not procrastinate on debt collection:

Mounting Bad Debt Write-Offs
It’s a sad fact: the older an outstanding invoice gets, the less likely it is that
you’ll ever see a dime of that money. By dilly-dallying on past due accounts,
you’re setting yourself up for a whole heap of bad debt that you’ll ultimately
have to write off. And as if that isn’t bad enough, this will also wreak havoc on
your credit rating, making it even harder to get financing when you need it
most.

In our next post we’ll continue to explore more reasons to act quickly and decisively on bad debt. And meanwhile, don’t hesitate to contact us for more ideas and information about debt collection.

In our previous post we talked about the importance of maintaining a strong cash flow, which means that you need to be alert and act decisively on past due accounts.

Today we’ll explore another reason to do so:

Skyrocketing Collection Costs
The longer you wait to collect on those overdue accounts, the more money
you’re flushing down the drain. You’ll need to hire more staff, bring in third-
parties to help you, or spend on new technology to get the job done—all of
which takes a hefty bite out of your profits.

Next time we’ll continue to explore more aspects of your business and how they can be negatively affected if you procrastinate on your collection responsibilities.

In the cutthroat world of business, maintaining a strong cash flow is the
lifeblood of any company. But when businesses drag their feet on collecting
overdue accounts, they’re playing with fire. As a no-nonsense collections
expert with years of experience under my belt, I’m here to give you the straight
talk on why it’s absolutely vital to act decisively when it comes to delinquent
invoices and the potential consequences that can follow if you don’t.

In the coming weeks, we’ll discuss five areas of your business that will be negatively affected if you’ll procrastinate on debt collection. Here is the first one:

1. Cash Flow Catastrophe
   When you let past due accounts linger, you’re effectively choking your own
   cash flow. Without those payments coming in on time, you’ll soon find yourself
   struggling to keep the lights on, pay your suppliers, or even invest in the
   growth of your business. What follows is a downward spiral of debt and loans
   that only make matters worse.

The next post will explore another important aspect of your business that will suffer if you’ll procrastinate.

If the matter involves a balance of $50,000.00 – $60,000.00 or less a paralegal specializing in collections
and/ or Small Claims Court can be very helpful. They may regularly deal with these type of cases and are
experienced and familiar with the Small Claims Court of various provinces that operate differently than
the Superior Court in many instances.

Last but not least paralegals will do the work for a fraction of what a law firm would charge which also
makes them much more user friendly in these situations.

If the matter involves balances above 50,000.00 – $60,000 ( The Ontario Small Claims Court monetary
limit is presently $35,000.00) you would be advised to find a lawyer that has collection experience to
help you.

In previous posts, we described the work of paralegals and collection agencies. Are there other legal entities that can help you collect debt?

Third Parties – Creditors will sometimes have factoring companies or someone they know or have a
relationship with call or write the debtor. This could be a friend, an accountant or maybe just someone
who is very experienced in business.
What can a third party do?
Not much unfortunately. If they are not a collection agency or part of the legal profession under the Law
Society they are not allowed to make collection calls or go to court for you. Not only that but it may
make matters harder when you finally do hire a paralegal or lawyer.

Next week: I have a collection problem – What do I choose? A lawyer or paralegal?

Paralegals and Lawyers are overseen by the Law Society of Ontario. Usually they do not make a lot of
calls for collection purposes or send out a lot of letters but they’ll send out a Legal Demand and proceed
with whatever legal action is needed to recover your delinquent, past due accounts and collect through
the courts what is owed you.
Collection practices that are experienced and do a lot of collections work will write and call the debtor
before taking any court action and make a determined attempt to resolve the matter. They will report
judgment debtors to Equifax & TransUnion while continuing to work and collect money owed you even
after the court renders a judgment in your favor.

Next time: who else can help with debt collection?

Wait for our next post to find out…

In our last post we discussed special features of collection agencies and we started to examine how they are different from law offices that specialize in collection. Let’s take a deeper look into the subject.

Collection agencies are companies specially licensed to contact debtors and are obliged to comply with
ministry rules. In Ontario they are regulated by the Collection Agency Act. Every one of the collection
staff that works for them has to be personally licensed under the Collection Agency Act.
How do they work?
They are allowed to reach out to debtors either by writing them or by phoning them and request
payment for past due invoices, but they have to follow the rules laid out in the Collection Agency Act.
They will also file a report with a credit reporting agency like Equifax or Trans Union .
What they can’t do?
They cannot file a claim in court or make an appearance in court for you. They cannot take any other
legal steps. When a file gets to the point where court is necessary to collect a debt they are obliged to
turn it over it to a lawyer or paralegal.

In our next post we’ll discuss how lawyers and paralegals can help you with debt collection.

Continuing our discussion from the last post, does anyone hired to collect monies owed to you is a collection agency?

Well not necessarily, the person writing or calling a debtor can be a Collection Agency, or it might be a
Law Office (Lawyer or Paralegal) or a third party acting on behalf of the creditor.

How are they different?
Collection agencies are companies specially licensed to contact debtors and are obliged to comply with
ministry rules. In Ontario they are regulated by the Collection Agency Act. Every one of the collection
staff that works for them has to be personally licensed under the Collection Agency Act.
How do they work?
They are allowed to reach out to debtors either by writing them or by phoning them and request
payment for past due invoices, but they have to follow the rules laid out in the Collection Agency Act.
They will also file a report with a credit reporting agency like Equifax or Trans Union .

In our next post, we’ll discuss the work of a collection agency, and the unique capabilities of a law office that is specializing in debt collection. Hoping to see you soon…

As promised, we continue to educate our clients and the general public about important issues and terms related to the debt collection industry.

Today we’ll define a very basic yet extremely important term: collection agency.

When you look for a trusted collection professionals, it helps if you know what to look for.

Collection Agency. Everybody is familiar with this term right? They are the ones that call and ask you to
pay their client. So anyone hired to collect monies owed to you is a collection agency, right?

Well not necessarily, the person writing or calling a debtor can be a Collection Agency, or it might be a
Law Office (Lawyer or Paralegal) or a third party acting on behalf of the creditor.

What are the main differences, and which of these will be a better choice for you?

We’ll continue this discussion in our next post. Stay tuned….

Every week we will define and try to explain different terms that you might see as you make your way through the process of debt collection, accounts receivable and the Small Claims.
Many of these words will be familiar to some of you, or you may have heard them but are not sure
exactly what they mean.
Hopefully we get to all of them, one by one:
We’ll begin with the more familiar ones:
Creditor. Is the one owed money. If you have given your customer credit and have not been paid, you
are a creditor.
Debtor: If you owe someone money and haven’t paid them by the due date, you are a debtor.

How does a collection agency work? And how is it different from a law office specializing in debt collection? You’ll learn the answers to these questions in our next post.