SHARE

Time is a powerful thing. In some circumstances in cannabis, time can be your friend. Giving your plants an extra week to flower so that they can reach optimum potency and flavor profiles, is a good idea. Adding an extra day to review a contract, is a great idea. Leaving your freshly blasted concentrate slab in vacuum ovens for an additional 12 hours, so it purges appropriately, is a great idea.

When you take the extra time, to hand manicure and trim your bud for a beautiful presentation, that is a great idea. Many number of things in cannabis benefit from additional time. However, when looking at cannabis debt collection that is most certainly an exception to that rule.

Time is of the essence

Collections fall under the time-is-of-the-essence category. When you wait to send a debt into the collections process, it is rarely rewarded. In fact, most of the time waiting to send a debt to collections is punished. The longer a debt takes to make it to collections, the less of a chance you have to collect.

Every day that your customer is delinquent in payment, their chance of making that payment goes down, causing further legal action, like a lawsuit, more probable. And as we can all imagine, the goal of collections is to recover the client’s debt without the need for a lawsuit. Lawsuits take a lot of time, they will cost a lot of money, and should only be used when absolutely necessary.

The goal of a collection agency is to make a successful collection without the need for litigation.

The chart below (from the CLLA.org) describes the percentage chance of a successful collection by the months delinquent in payment. As you can see, there is a significant drop off as time passes. At three months there is almost a 3/4 chance to collect the debt. By waiting for an additional three months (making the debt six months delinquent) the percentage chance of collection drops to slightly more than 1/2. Those are never odds one should take when trying to recover money owed to them.

collection

This chart shows a direct correlation between someone holding onto a debt and their chances of getting paid back. The longer a creditor waits, the less chance that creditor will get paid.

Think about it, as a business person with ethical and moral principles, do you really want to extend someone the courtesy of extra time to pay who have disregarded you and your business by not paying you back on time, within the terms that you both agreed upon.

When a claim arises, do not hesitate. That money is yours; the terms you signed and agreed to entitles you to that money when it’s due. If the debt becomes delinquent, send it to collections as quickly as you can.

 Seven Basic Facts On Debt Collection

Provided below are seven basic facts that you should be aware of:

  • Again as we stated above, don’t wait to start making your collection effort. The longer the account remains unpaid, the less likely you’ll be successful in collecting the debt.
  • Firm but courteous collection efforts are more likely to provide results than angry, emotionally charged or abusive ones. If you are fair and level-headed with your customer, they’ll be much more willing to work with you.
  • While emails, faxes, letters, etc. are all good tools to use in debt collection, the majority of any collection effort should be done by phone.
  • Don’t go into your collection effort expecting a settlement, and demand the amount from your customers. You should begin any collection effort with the intention to receive payment of the total amount due.
  • Generic faxes and letters are likely to be discarded or ignored. At the very least, ensure any physical communications are addressed to a specific person (either the debtor himself or, in the case of commercial collections, the owner of the business or the person in charge of paying bills).
  • Plan out what you want to say so you won’t forget anything important. Being prepared when making a collection call goes a long way. Think about possible excuses you might hear from the debtor and come up with your response before you pick up the phone.
  • Find out the reason a customer hasn’t paid goes a lot farther than throwing around accusations. Once you understand the reasons for non-payment, you’ll be far better prepared to work with the debtor until payment is obtained.

Do you have customers who haven’t paid you for your services? Wondering if you should go through a collection agency? Click here and read our previous article. Keep an eye out for our next article and if you have any questions email us here.

To stay updated on the latest tech, entrepreneurs and innovative companies in the cannabis industry, click here.

Previous articleEntrepreneur of the Week: Matt Mayberry of TRYM
Next articleOutside-In with DCN: Meet the Founders of Green Tank Technologies
Brett Cody
Brett Gelfand and Cody Ziering are the founders and managing parters of CannaBIZ Collects LLC. Previously, Gelfand and Ziering together, helped build a Colorado cannabis wholesale operation from the ground up, including an indoor cultivation, edible kitchen, extract lab, and dispensary. During their tenure in Colorado, both executives recognized the burden cannabis, CBD, and ancillary companies were experiencing when releasing credit terms to other cannabis firms. Brett’s father, Attorney Ross Gelfand, joined the CBC team, and together the three started CannaBIZ Collects. Ross has over 30+ years of commercial collection experience and sold his collection agency and law practice in 2012. Brett and Cody convinced Ross to focus his attention on the growing credit and collection trend in the cannabis space.