How to Collect Money from People Who Owe You

This article offers some insight on how to collect money that you're owed without getting into a conflict. So, if someone owes you money, you can collect without it becoming unpleasant.

Determine at what point of delinquency you will decide that the debtor will be unlikely to pay unless you initiate collection activities. You don’t want to bring down the hammer on a friend who borrowed twenty dollars if he doesn’t pay within two days. The reason is that once you initiate collection activities against a party, it’s unlikely that they won’t view you as an adversary. This doesn’t mean that you’re going to have to engage in unpleasant confrontations with the debtor, but chances are that you won’t be able to be friends anymore. And, if it’s a business debt, there’s a good chance that you won’t do any new business with them unless things are handled carefully.

Start out with a contact that is an inquiry. Your first contact should take a tone that suggests that at this point you’re just making sure that the debtor is aware that their debt hasn’t been paid. It allows them to save face and a certain percent of debtors will pay once they realize that you totally intend on collecting and that this debt won’t just vanish.

If an inquiry contact doesn’t work initiate a demand contact. Again, while your intent while executing this contact is to take a strong position and demand payment, it doesn’t mean you should be hostile. But, at this point, you’re no longer pretending that you think they may just be confused. You are rightly owed money and you must either be paid immediately or a strong commitment must be made as to when payment will be rendered.

If you’re unable to easily contact the debtor or promises to pay aren’t kept, then you must initiate a series of collection activities. At this point you’ll have collected from most of the people except those that are the most difficult to collect from. Chances are that they either don’t have the money or just don’t feel like paying. It’s your job to make them prioritize you through multiple contacts by phone, letter, e-mail, or in person, so that they decide to pay you before they pay someone else.

Tips:

Remember to keep your cool and not let yourself get upset. It's the debtor who should be upset because they haven't held up to their commitment to pay.

Don't feel guilty about collecting what you're owed. You didn't fail to keep your word. The debtor did and you have every right to collect.

If you are collecting a business debt, make sure you review the federal fair practices collection act and any applicable state laws or you could end up liable yourself.

Be careful about revealing to any other parties that the person hasn't paid you as you could end liable for libel or slander depending upon the circumstances.

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