So, your customer went out of business owing you a pile of money and you’re wondering what to do next. If you’re reading this I imagine you’re hoping for some kind of collection agency magic trick to get your money back, and there are a few things you can do to try to track your customer, now debtor, down to try to get some kind of payment plan in place. But at the risk of ticking you off and having you never read anything I have to say again I’m going to state what I believe to be the reality. You blew it.
If you manage your accounts receivable properly in the first place, this should not happen. Worst case, if a customer does go out of business you should know about it before it happens. If you’ve been making your collection calls and sending your collection letters and notices, and most importantly paying attention to the warning signs that we discuss frequently in this blog you should already have a payment plan in place and alternate ways of reaching your customer before he closes down.
If you don’t, your best strategy in my opinion (which I get to state because this is my blog) is to give the account to a collection agency and put your time and effort into creating or repairing your accounts receivable management system.
If you insist on trying to handle this yourself (which I insist is a poor use of your time), here are some steps you can take.
Move quickly. Drive by and see if you can speak to your customer, now debtor and get some alternate contact information before he completely disappears. Years ago I had a customer that was refusing my calls, I drove to his place of business and found my customers employees packing the place up. The employees I was talking to insisted the owner wasn’t there etc etc. I stood my ground and kept grilling them (politely but insistently) until the owner took pity on them and emerged from a back room. I got my money. If you find your customer, ask for your money, if you can’t get it write up some kind of agreement on the spot. If you don’t find him, talk to the neighbors, see if anyone has a phone number or address on him.
Review your old paperwork, look for alternate phone numbers, bank accounts etc. Talk to everyone in your company that had contact with the customer, especially sales, see what they know. Search the internet for the owners names and the business name, you might find a home number or an alternate number.
Bottom line, move quickly and decisively. Do NOT be passive unless you are willing to lose your money.