You’ve sold a product or performed a service, and shockingly enough, you expect to be compensated. If you’re new to business, you never envisioned yourself a debt collector. If you’re a veteran to business, you know proactive accounts receivable management and collecting debt, or recovering profit as we like to say, are important strategies to keep cash flowing, and ultimately, stay in business.
Some companies opt to collect debt in house, some choose contingency based collection agencies, still others choose to go to small claims court. Optio Solutions’ clients know that the most effective approach begins with a flat fee based model that pro-actively delivers pre-collections Talking Statements®, diplomatic collection letters and written demands, and should it become necessary, some debt must be turned over to an ethical debt collection agency.
For now, let’s examine the top 5 reasons to avoid small claims court when collecting debt.
- Money – Time is money, we know that, but consider just the cash outlay. Small claims filings average $30-$50 per case, while serving defendants averages around $40 per defendant. Don’t forget creating supporting documents, gas to get to the courthouse, paying for parking, etc….
- Time – What’s your time worth? You can’t quantify this, and I’ll tell you why, because what if while your case is being heard you missed a prospect call that might have lead to your biggest sale to date? You’ll need to spend the necessary time preparing your case, awaiting confirmation that the defendant has been served, awaiting a court date, and keep this in mind, the most efficient claims require two court visits, one to file and the hearing itself.
- Emotion – Small claims court can be emotionally draining. Between the preparation, reliving certain incidents and the outright confrontation, many people describe the process as one they will never engage in again.
- Judgement – If you can convince the judge that you are correct in your claims you will receive a judgement. Now the fun begins. Receiving a judgement does not equal receiving payment. If you don’t receive payment, you will have to seek judgement enforcement which means further legal steps, further time, further money, and further emotional distress.
- Relationship Destroyer– One thing you can bet on is that you will not be doing business with the defendant again. Not only are you likely not to do business with the defendant again, don’t count on doing business with their family, friends, and their social network. What will you do if the defendant posts a complaint to a site like Glassdoor.com for the whole world to see?
Have you been to small claims court to collect debt? What was your experience? Considering it now? Read our Choosing a Collection Agency whitepaper before you do, by clicking on the graphic below.