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How To Collect Debt From Delinquent Client Accounts

Written by: Rolande S. Sumner, Executive Contributor

Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.


Every business owner will experience at least one client who chooses not to pay their bill at one time or any other. It's frustrating and impactful to your bottom line. For small coaching businesses, these debts are often ignored or written off by the owner. The time and energy to chase down a delinquent account can be costly and annoying. However, if the debt is substantial enough, you may consider getting involved in a debt collections agency.

Below are 6 steps you should take to prepare your delinquent client account.

  1. Review your terms and conditions. Your terms and conditions must clearly state that you may utilize a debt collection agency to collect unpaid debts and charge the client for any charges incurred in collecting that debt. Also noteworthy is that the client signed or agreed via a checked box that they have read and understood the terms and conditions. I am old school. I prefer the pdf or hardcopy of the terms and conditions with ink or e-signature. It makes it easier to prove that the client signed. However, with the proper terms and conditions check box, you can verify the client agreed via an excel spreadsheet with data that specifically identifies the client.

  2. Review the client's account. Take note of the client's account balance and payment history. You also want to review fees incurred over time, debt collections agencies like reports with a client's complete payment history. Saving a pdf version from your accounting software will go a long way.

  3. Make several attempts to collect the debt. Email, snail mail (via trackable method), phone calls, voice messages, and text messages are all suitable methods. Per Federal law, you may contact the client once daily, Monday through Sunday, between 8 am and 9 pm in the client's time zone. Make a note of all attempts.

  4. Do be professional. Don't be rude. Using harassing or threatening techniques is horrible and unnecessary. Instead, be clear and compassionate without buying into their story. If you offend the client, they are not going to pay you. Speak to them in a manner that you want to be spoken to.

  5. Renegotiate payment terms. Once you contact your client, offer to make alternate payment terms. Strategically create three options for the client. Add a date of acceptance to the offer. Popular debt collection options include:

    1. 1-2 settlement options have a discounted percentage of the total amount.

    2. 1-2 options will have a payment plan.

    3. 1-2 options will be a lump sum offer.

    4. For example, the outstanding balance is $10,534. The client has 30-days to choose, preferably in writing. The options may look like the following:

      1. Option no.1: Pay a lump sum of $8,427.20 (20% discount).

      2. Option no.2: Pay 6 payments of $1,228.97 (30% discount).

      3. Option no.3: Pay 12 payments of $877.83 (full balance).

  6. Transfer the delinquent account to debt collections. If the client does not choose the offer, does not pay the missed payments, or does not respond, transfer the outstanding account balance to debt collections. Debt collection is not a mandatory step but is available if you choose to take it. Consult with your tax professional to learn if the debt is eligible to be filed on IRS Form 1099-C, Collection of Debt. IRS Form 1099-C makes it so the debt will need to claim the unpaid debt as income on their taxes.

When sending your delinquent client account to a debt collection agency, send them all pertinent information.

  • Client contact information;

  • Signed terms of conditions or excel spreadsheet with checkbox data;

  • Emails about the debt and alternate payment offer;

  • Client account history.

To learn more about how I can help you prevent delinquent client accounts, visit Business Launch Prep School, where I will walk you through the four pillars of creating your coaching practice resulting in you creating and selling your 4-5 figure program to your ideal client.

Follow me on Facebook, LinkedIn, and visit my website for more info!


Rolande S. Sumner, Executive Contributor Brainz Magazine

Rolande S. Sumner is a retired US Army veteran and the CEO & Founder of Life After Service Transitional Coaching LLC®. Rolande served her country in the United States Army National Guard from 1995 to 2015. During her career, she was an Administrative Clerk, Heavy Vehicle Operator, and Human Resources Manager. She served as both a traditional National Guard Soldier and as an Active Guard Reserve Soldier. During her military tenure, Rolande received multiple honours: Afghanistan Campaign Medal, NATO Medal, Army Achievement Medal, Army Commendation Medal, Combat Action Badge, and the Army Accommodation Medal.



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