Archives for May 2013

Collection of Past Due Accounts

Collection of Past Due AccountsAs a business operator, one of the challenges is how to handle customers who fail to pay for goods or services in a timely manner. As most savvy business owners are aware, it is a common practice for outstanding invoices to go unpaid for up to three months. It has been determined through several studies that bills delinquent by 3 months are ultimately paid off by the customer on an average of 75 percent. However, receivables that go unpaid for 6 months or more are less likely to be paid up in full. When collecting on past-due accounts, time is of the essence.

With that in mind, Wilmington Business Attorney Wesley Scott Jones has a few suggestions for alleviating the hassles and stress that collecting on past-due accounts can cause.

  1. Give customers who pay their bills early an incentive, such as a small discount of 2 or 3 percent. For example, a 2 percent discount for a service that cost the customer $2500 would net them a $50 discount if they paid it off in 10 days rather than 30.
  2. Be aware that most people receive their tax refunds within 20 days after filing. That means many of your customers may have extra cash to settle up with you starting in May and early June.
  3. Establish a policy that charges extra when a bill remains unpaid after 30 days. Attorney Wes Jones can counsel you regarding the NC policies regarding usury statutes and federal regulations so you will not overstep any legal boundaries.
  4. Make courtesy calls to delinquent customers. This is not a threat tactic, but a simple check-in to make sure that they were happy with the goods or services and that there are no extenuating circumstances preventing them from paying.
  5. If it is obvious that the customer is simply trying to duck out of compensating you, appeal to their conscience. For example, you could gently remind them that you also have bills to pay and their failure to take care of this obligation is further complicating your financial situation.
  6. When all else fails, employ a third party to make a phone call or personal visit regarding the nonpayment. Ideally, this individual would be on the firm, no-nonsense side and remind the customer that legal action may be the next step.
  7. When these methods are unsuccessful, the next move should be in the form of a written request.

The carefully worded letter should open with an acknowledgement from you stating that you appreciate their business and hope that they have been pleased as a customer. Ask them to please excuse this request if payment has already been made. Then, gently explain that if no payment has been submitted, their account is past due. Be sure to include the amount and the date it was due. At this time ask if they plan and/or are able to pay the amount in full or would a partial payment be more suitable at this time? The logic here is to offer them a way to begin settling this issue in a more manageable way.

Next ask them to please notify you immediately if there is a reasonable explanation for their delinquency. Be sure to include all of your contact information, including a cell phone number and e-mail address. Then let them know that by a certain date, you will have no other choice than to turn the matter over to a collection attorney or take it to small claims court.

Reiterate to the customer that you deeply regret mentioning these choices, however, you feel that you have given them an ample amount of time to pay the invoice.

*Of course make copies of all the communications initiated by you and received by the customer, including e-mails and phone messages. From a legal standpoint, such hard copy documentation is valuable evidence.

If your company is having difficulties with past due accounts, why not meet with Attorney Wes Scott Jones? As an experienced business law attorney, Wes can discuss your concerns and guide you to the strategies that are right for your individual situation.

To contact the office of Wesley Scott Jones directly, please call 910-256-5800.

Starting and Owning a Franchisee Business in Wilmington

WSJ Law, Business Law in Wilmington NCFor a small city, Wilmington, NC has an impressive number of franchise businesses. From fast food mainstays to upscale grocery stores, a variety of retailers and service companies, the Port City has proven a profitable location for such operations. Many prospective small business owners choose the franchise route because it usually simplifies the trial and error process and eliminates some of the headaches associated with business start-ups. Additionally, they have the added confidence due to the built-in support a corporate franchise headquarters can provide. However, many do not realize the pitfalls that owning a franchise may present.

As an attorney for the greater Wilmington, NC area, Wesly Scott Jones frequently works with small business and franchisee clients. Wes has walked down this road before and is aware of the legal complexities that owning or investing in a franchise can pose. Wes certainly acknowledges that each case is unique. However, when it comes to disputes within the realm of franchises and franchisees, there are several typical scenarios.

Competition – Your franchise agreement should mention the limits on the number of franchises that may be established within a given geographical area. In setting yourself up for success, this is a very important detail to consider and confirm.

Full disclosure from franchisor – As with all laws, this point can vary area by area. Most jurisdictions require franchisors to provide their franchisees with absolutely all of the material facts they know about the business. For example, unresolved legal issues, finances, insurance issues, or anything else that stands to impact the business. Omissions, misleading details, and misinformation, may be against the law and grounds for legal action.

Breakdown in the support system – Many small business owners are attracted to franchises in the first place because of the promise they hold for ongoing support. All too often, that promised backup disappears after the final monetary obligation by the franchisee is resolved. Wes can review your franchise agreement and see if any violations have been made.

If you’re in the Wilmington area and thinking about starting a franchise, you should be aware of the many legal issues surrounding these types of businesses. Whether you’d like to review a proposal, have questions about an existing agreement or would just like to have a pair of experienced eyes look over whatever is already in place, we invite you to contact the Law Firm of Wesley Scott Jones.

For a free consultation, call 910-256-5800 or complete the form to the right.