This document provides strategies for collecting unpaid invoices. It discusses maintaining accurate client credit files, monitoring accounts receivable, establishing clear payment terms, and when to consider legal action or outside collection help. Key steps include acting quickly when invoices are unpaid, developing rapport with clients, and having proper documentation to substantiate debts if claims are disputed.

1. Protect Your Bottom Line:
Effective Strategies for Getting Paid
Presented by:
Jocelyn Ruth Nager, Esquire
Jackelyn Florez, CLA
Frank Frank Goldstein & Nager, PC
1430 Broadway Suite 1615
New York, New York 10018
Tel 212-686-0100 Fax 212-686-6726
www.ffgnesqs.com
A Certified Woman-owned Business

2. Collection Trends
Source: Commercial Collection Agency Association
100% 94.9%
90%
89.9%
81.3%
80%
69.6%
70%
60% 52.1%
50%
39.1%
40%
30% 22.8%
20%
9.3%
10%
0%
Due Date 30 Days 60 Days 90 Days Six Nine One Year Two
Months Months Years
This chart illustrates the decrease in collectability over time.
As time passes, the probability of collection decreases.

3. Impact of Bad Debt Write-off
on Sales
Your And Your
Write off Net Profit is
2% 3% 4% 5% 6%
You will need the following amount of
additional sales to offset the loss
$5,000 $250,000 $166,666 $125,000 $100,000 $83,333
$10,000 $500,,000 $333,333 $250,000 $200,000 $166,666
$25,000 $1,250,000 $833,333 $625,000 $500,000 $416,666
$50,000 $2,500,000 $1,666,666 $1,250,000 $1,000.000 $833,333

4. Interview Your Client
• Take time and get to know your client’s business
• Who buys your client’s services?
• Check references
• Trade References
• Bank References
• Know your client’s pay cycle
• Establish a rapport with the accounts payable
person who will process your invoice

5. Client’s Credit File
• Signed written agreements with clear payment terms,
conditions, indemnification, and credit and collection
policies. Also, a copy of a credit application if you wish to
use one. Credit applications should be renewed every 2-3
years
• Updated Statement of Account – make sure it matches the
name on the contract
• Copies of all invoices that correspond to the statement of
account (make sure the name on the invoices match the
statement of account as well as the name of the company
on the contract)
• Copies of payments made by client (banking
information/verification)

6. Client’s Credit File (continued)
• Copies of correspondence received from the client or
to the customer. This should include disputes or
incidents reported by the client as well as your
response to them
• Copy of client’s business card
• Notes, news regarding new business locations or
ventures— news items—negative or positive
regarding your customer
• Copies of corporate records, business name filings,
bankruptcy filings, court judgments and tax liens

7. Client’s Credit File (continued)
• Copy of personal guarantees, if any
• Tax ID numbers, Social Security numbers
• Trade References—verification and notes
• Credit Report
• List of authorized personnel

8. Personal Guarantee
• The personal guarantee will insure that if the
corporation should go out of business you can pursue
the individual for the corporate debt
• The personal guarantee should be on a separate page
from the contract or credit application
• The individual should sign in a personal capacity not as
a corporate officer. It is important that no title is listed
for the individual. If the individual signs and indicates
his title by his name, he is signing as a corporate officer
and not individually. Have the client sign the guarantee
again without the title. All documents should be dated
• You must also obtain the individual’s social security
number, addresses, and personal banking information

9. Handling Clients with Bad Credit
or No Credit
• Don’t expect a business with a history of bouncing
checks or paying their bills late to change when dealing
with your company
• If you must do business with the chronically late, lay
down your credit rules early and firmly. Start the
relationship slow
• Keep the amount of services to a minimum until they
have proven themselves
• Do not do business without having signed contracts
clearly stating and agreeing to the payment terms

10. Document Retention and
Red Flags
• Copies of Checks – Look out for changes in the company
name on the check. Is it different than the client name
you have? If so, call the client and inquire why? This
could be a red flag of financial difficulty. By keeping a
copy of the payments, it provides banking information and
also helps you spot trouble before it gets out of hand
• Credit Application – make sure to verify the information
given. Many times, certain information is falsified. (i.e.
social security numbers, trade names, tax id numbers and
corporation information

11. Document Retention and
Red Flags (continued)
• Obtain a credit report on new clients prior to doing work.
It shows historical payment data, bankruptcy records,
lawsuits, liens and court judgments and a risk rating that
predicts how like a client is to pay its bills. It also reveals
relevant data including fictitious business name filings and
tax liens
• The idea is to get as much information about your
client’s assets and business relationships upfront
• Get a personal guarantee whenever possible—especially
if the company is a startup

12. Strategies for Collecting
Your Receivables
• A good client is a paying client. Anything else is a
hallucination
• Don’t be afraid
• Act quickly—Call, call, call
• The owner or financial person should call
• By offering an extension or a payment plan, it
maintains your good relationship and keeps your
reputation intact
• Payment delays can be avoided by developing a
rapport with the client

13. When To Consider Additional
Help
• You must get paid
• The invoice has aged 60 days
• Broken promises
• Partial payment
• No response
• Move forward, do not delay

14. Preventive Measures
• Obtain information • Develop a relationship
with someone in the
• Keep an updated accounts payable
credit file on all your department
clients
• Consider calling on days
• Monitor accounts 20-28 before invoice is
receivable carefully due to make sure all
documentation received
• Establish a credit by Accounts Payable
policy
• Contact your client
for non-payment

15. Case Study #1
• Existing client has strict credit policies in place
• Requires fully completed credit application as well as
a personal guarantee
• Pursues with suit quickly for full amount owed plus
costs of collection/litigation, interest and attorney’s
fees as specified clearly in their credit application
• Successfully collects its receivables. Very few go to
litigation.

16. Case Study #2
• Existing Client maintains proper credit file with all
documents substantiating any balances owed
• A claim was submitted for litigation
• Documentation provided to defendants and
demand made for full amount or suit
• Claim was paid in full within 60 days

17. Collection Options
 Collection Agency
 Collection Law Firm (Legal Action)

18. Collection Process
 Claim is forwarded to attorney for collection.
Acknowledgment is sent to the client and demand
in writing and by phone
 Debtor will either make payment arrangements,
dispute or ignore
 Ask for disputes in writing

19. Collection Process (continued)
 Debtor’s dispute is sent to the client with attorney’s
recommendations
 Suit or no suit—based on severity of the allegations
 Client’s decision to sue or write-off
 If no dispute, recommendations made based on the
collectability to sue or write-off

20. Legal Process
 Suit is recommended if not disputed, costs (advanced only),
fee contingent upon collection. If disputed, small non-
contingent retainer plus costs and the balance of the
contingency fee
 Costs received – Summons and Complaint prepared and filed
with Court
 Defendant served with papers
 If an answer is filed by the defendant, discovery period begins
and we await trial date

21. Legal Process (continued)
 If there is a counterclaim, then an hourly fee is charged to
handle if client wishes to have representation
 If no answer, petition submitted to Court for entry of default
judgment
 Judgment
 Post Judgment Collections
 Property or income execution
 Bank subpoenas with restraining notices to freeze bank
accounts
 Sell commercial property
 Restrain monies due from third parties

22. Costs of Litigation
 Out of pocket expenditures
 FilingFees
 Service Fees
 Motion Fees
 Execution Fees
 Marshal Fees
 Time
 Expectations

23. Conclusions
 Your receivables are the lifeblood of your
business, protect them by taking these steps
and following through with your credit and
collection policies.
 It is a smart business practice to maintain a
credit file on your clients, monitor your accounts
closely, and take necessary action when
problems arise.
 When you are unsure of what to do, seek
professional help.