The Hidden Cost of Procrastination on Debt Collection
Posted on September 22, 2023 by Michael Lebovic
Today we’ll discuss an often overlooked cost that you may be paying for procrastinating on your debt collection responsibilities: Lost Opportunities.
When you’re up to your neck in chasing overdue accounts, you’re missing out
on chances to grow your business. Instead of focusing on more profitable
pursuits like marketing, R&D, or pursuing new ventures, you’re stuck running
after money that should already be in your pocket. This lost opportunity can
put a serious damper on your company’s long-term prospects.
I’ve seen it time and time again: businesses that take swift, decisive action on
past due accounts come out ahead. By tackling delinquent invoices head-on,
you can keep your cash flow healthy, minimize collection costs, cut down on
bad debt write-offs, maintain strong customer relationships, and stay focused
on what really matters—growing your business. Don’t let procrastination on
collections be the downfall of your hard-earned success.
We hope that our posts help you feel more comfortable with the subject of debt collection. Let us know if you have any questions or if you need advice about a current debt collection issue.
Procrastinating on Collection Calls to Preserve the Relationship? You May Inadvertently Achieve the Opposite
Posted on September 08, 2023 by Michael Lebovic
Today we’ll discuss another reason why you should not procrastinate on those collection calls.
Customer Relations on the Rocks
Look, I get it: you want to keep your customers happy. But by letting overdue
accounts fester, you’re doing just the opposite. The tension and mistrust that
builds up can drive even your most loyal clients away—and with them, any
chance of future revenue. The key is to communicate promptly and clearly
about payment terms, so everyone’s on the same page.
Stay tuned for more reasons and good advice in our next post…
Procrastinating on Past Due Accounts Can Result in Massive Write Offs. Here is Why:
Posted on August 25, 2023 by 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.
More Reasons Why You Should Not Procrastinate On Past Due Accounts
Posted on August 18, 2023 by Michael Lebovic
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.
The Hard Truth: Why Procrastinating on Past Due Accounts is a Recipe
for Disaster
Posted on August 06, 2023 by Michael Lebovic
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:
- 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.
Who Should I Choose? A Lawyer or a Paralegal?
Posted on July 28, 2023 by Michael Lebovic
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.
Besides Paralegals and Collection Agencies, Who Else Can Help You Collect Debt?
Posted on July 18, 2023 by Michael Lebovic
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?
What Can a Paralegal or a Lawyer Do For You?
Posted on June 20, 2023 by Michael Lebovic
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…
Collection Agency or A Law Office? The Discussion Continues
Posted on June 05, 2023 by Michael Lebovic
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.
Collection Agency or a Law Office? What’s the Difference? And Which One Should You Choose?
Posted on May 23, 2023 by Michael Lebovic
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…
What is a Collection Agency – Collection Term You Need to Know
Posted on May 01, 2023 by Michael Lebovic
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….
Debt Collection Terms that You Should Know
Posted on April 14, 2023 by Michael Lebovic
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.
To Prevent Debt Collection Issues: Start Doing These Things
Posted on April 02, 2023 by Michael Lebovic
- Give your client a quote in writing so there wont be any misunderstandings.
- Write up an agreement to at least cover important areas like:
The scope of the job to be performed or the service to be offered.
What, if any, is the timeline for the work or is there a deadline ?
What happens if there are extras asked for beyond the original request?
When and how will the client / customer pay you?
What if there is a cancellation? How will that unfold? - Keep an eye your accounts receivable and send reminders or statement of
account out to them at 60 and 75 days when the account’s past due. Let them
know that at 90 days delinquent accounts are sent to a 3 rd party if payment has
not been made.
How soon should you prepare for success in court?
Posted on March 20, 2023 by Michael Lebovic
I highly recommend avoiding going to court if you can.
But just in case a court action cannot be avoided you should be prepared.
How soon should you prepare?
Even before you know there is a problem.
By having the right intake and processing systems in place your job will be more than half done should you ever be in a situation where you have to file a claim in court.
Read this Before You Grant Credit to a Client
Posted on February 01, 2023 by Michael Lebovic
Before you grant credit to your clients take the following basic steps.
Do this even with current clients if you have not done it yet; especially if they have been paying you in cash.
Cash is good. They used to say cash is king but it could come back to bite you if that account that was so good for years suddenly goes sideways and you are owed monies.
Whether it is a company or your customer is a consumer:
- Get copies of photo ID (preferably two)
- Get their home as well as the business address.
Why do you need this? (they may ask)
Because if you give them credit you want to protect yourself.
Get a copy of a VOID check – it can be very useful down the road.
Lots of folks communicate by text now. It’s fast and It’s convenient. But it is not great should you have collection problems later on.
If you love text, use that by all means BUT use email for all the important stuff. For example: when you ask for payment. Scope of work or size of the order. Changes to orders or work. You get the idea.
And NEVER rely on just a phone call for anything important
Being careful with new clients / customers and the “gift” of cash
Posted on July 28, 2022 by Michael Lebovic
We all appreciate getting new business and we especially appreciate getting new clients. We might also
appreciate customers that pay in cash. That said, these days it is more important than ever to exercise
caution when extending credit.
If you have a cash and carry business or require paymen in advancet you can skip this post.
For those of us who are in a situation where we need to extend credit to stay competitive, I bring you
this tale of caution
One of our clients, a very busy manufacturer, had a new customer place a substantial order which they
then came to his premises to pick up. Everything went very smoothly, they paid for the order in cash and
took the material.
They were not asked to fill out a credit application nor to provide any further information then was
found in their email signature / letterhead.
Over the next 6 weeks they placed 6 more orders – all by email – which were filled and were to be
picked up when ready.
Though the orders were filled as they were received they were not picked up until the end of week 6
when the customer rushed in and took them all at oncebut did not pay for them, leaving a $25,000.00
balance.
With all of the activity in the warehouse no one noticed that this customer had no account set up.
Follow-up calls and emails went unanswered for months and our office had to be retained to collect the
monies owed.
Leaving aside the warehouse slip-up, what is needed with new clients is complete information on the
company, its principals, bank information and history.
At the end of the day a client should have a proven track record before you grant credit.
If you’re not comfortable granting credit you have the option of doing business on a COD basis or asking
for the owners to sign a personal guaranty.
How the system you set up can minimize collection problems
Posted on June 23, 2022 by Michael Lebovic
Getting new business, whether from an established client or a new customer, is the goal of every business, but how you process that business can mean the difference between growth and painful cashflow problems.
We all know what we need to do but we often get so busy that we start taking shortcuts that can come back to haunt us. Don’t allow customers to rush you into skipping steps that will not only protect you but your customer as well.
Take the following advice and you will avoid 90% of your collection problems
Step 1 – send a written quote
Step 2 – make sure your customer signs off on it or confirms approval in writing
Step 3- have a written agreement that nicludes these important basics:
a) Who are the parties
b) what is the scope of the work
c) what is the total cost before tax
d) if there is a deadline, what is it?
e) when and how does this have to be paid for?
f) what happens if payment is late? Will there be interest charged?
g) What happens if there’s a cancellation or a return?
h) is there a personal guarantor or indemnifier?
Step 4 – (if applicable ) ensure all changes and/or extras requested are confirmed in writing including
their additional costs .
Step 5 – Recap any problem that arises and their resolution in an email to your client / customer.
How soon should you prepare for success in court?
Posted on June 10, 2022 by Michael Lebovic
I highly recommend avoiding going to court if you can.
But just in case a court action cannot be avoided you should be prepared.
How soon should you prepare?
Even before you know there is a problem.
By having the right intake and processing systems in place your job will be more than half done should you ever be in a situation where you have to file a claim in court.
Important Step Before You File a Claim
Posted on May 30, 2022 by Michael Lebovic
A heads up to all of you consumers and business people who are owed money and have taken it upon themselves to start a court action on their own.
This is certainly the least expensive way to go from a dollar and cents point of view as long as you have got the time needed to invest in doing it properly. As the old expression says “the devil is in the details” and this is never truer than when you are drafting any kind of legal document or court claim.
Once again today I had to tell a prospective client that her judgment, which she finally obtained after much effort, was unenforceable because she did not have the proper name of the debtor on the judgment. It also explains why the judgment debtor has been ignoring her for almost four years.
So make sure you have the proper legal name of the company and that you have added any other parties that might be liable for your damages.
90% of your success in court lies in your preparation.
Planning To Sue? Learn These Terms First
Posted on November 01, 2018 by admin
Small Claims Court
Every province in Canada and state in the United States has a court like this set up for ..as the name implies, small claims of money. It is also a court where the rules are simplified so that the parties involved can represent themselves if they want to.
It is also known as a court of equity, meaning the main function of the judge is to look at doing what is fair in the eyes of the law even if not everything was done procedurally correct. Each side must bring evidence to support either their claim or defence but parties are given a fair bit of latitude when they haven’t followed all the rules of evidence or form of the court.
How much money can I claim for?
In Ontario, initially the limit was set at $500.00 but over the years it was raised to $3000.00, then $10,000.00 and now it is set at $25,000.00 . You can make claim for more than that but you would have to give up on the rest of the amount over the $25,000.00.
So if you are owed 30,000.00 and do not want to go through the expense of Superior Court, you can still file in the Small Claims Court and declare that you are “abandoning †the last 5,000.00
The limits in other jurisdictions vary. In British Columbia for instance it is $35,000.00. while In Alberta, it is now $50,000.00.
Jurisdiction – What does it mean?
Generally it means the power to make a legal decision or judgment on an issue. So as outlined above the Small Claims Court would not have jurisdiction over monetary claims of $45,000.00 or a landlord -tenant dispute.
A provincial Superior Court would have jurisdiction over many types matters but not over a Federal issue such as immigration. There are also criminal courts, tax courts, etc. You get the idea.
But In the area of collections, when we use the term jurisdiction we are referring not only to the court with the right jurisdiction but the right geographical area to file the claim in. ie; the proper jurisdiction.
Generally you must file the claim where the defendant resides or where the action arose – that is – where the event that gave rise to the debt occurred.
File in the wrong area and the court will reject your claim.
What if you are in Alberta and someone in Ontario owes you money? Legally the same rules apply, so why not just file in Alberta? After all, you’re already there. True, but often a court judgment has to be enforced because the defendant does not voluntarily comply with the court order and if you have a judgment from a court in Province or State A and your debtor resides in Province or State B you have a problem. Make sure to discuss this with your legal representative before you begin your court claim. There is nothing more frustrating than suing someone, getting a judgment finally and finding out it is not enforceable where the defendant either resides or has assets.
Planning To File a Claim? Learn These Words First
Posted on November 01, 2018 by admin
Plaintiff – The party initiating the legal action in court and looking for redress or more commonly money. Also referred to as the Complainant. This is the person or company doing the accusing.
Someone looking for redress or feels their rights have been violated is referred to a petitioner.
They will start the process by filing or having their legal representative file a court claim and having it served on the other side.
Defendant -The party against which the legal action has been initiated. They have to defend themselves. The term applies to private individuals or companies or institutions, there is no difference. In a criminal case this person would also be referred to as the accused.
A claim can be against one defendant or multiple defendants. Each one would have to file a defence if they want to avoid having a judgment entered against them.
Claim – After paying the court a fee this is the document prepared by the plaintiff that is filed with the court, laying out his or her case against the defendant.
The bare minimum necessary in a claim is :
Name address and Telephone contact for defendant
Exact amount you are seeking.
If it is a business to business claim, describe who the plaintiff is and what it does and do the same for the defendant.
For example: The plaintiff is a transport and shipping company registered in Ontario. The defendant is a manufacturer of furniture registered in Ontario.
Next describe in detail the facts that gave rise to the damages unpaid bill you are seeking payment for.
Attach whatever evidence you have to substantiate what you have stated and the amount you are claiming. If there is a provision for interest in your agreement you can ask for that too.
Defense – This of course is what the other side, the defendant will have to write up as a response to the claim and file with the court as well as serve a copy on the other side.
If the claim is unjustified state why this is so, and attach whatever documentation and evidence you have to substantiate your position. If you feel the claim is partially justified you have the option of proposing a payment for part of the claim and asking for the rest of it to be dismissed.
Member Affiliations
- Law Society of Upper Canada
- Qllective International
- Paralegal Society of Ontario
- Forwarders List of Attorneys
