In the old children's rhyme, Old Mother Hubbard couldn't find a bone for her poor starving dog because her cupboard was bare. Have you ever felt that way with old accounts that were too small to turn over to a collection agency, so you've written them off. But, like the Ghost of Christmas past, they come back to haunt you? What about returned checks? Any of those in your cupboard?

Statute for collections is four years for sale of goods/service with invoice or verbal contract, six years for written contract. So what does that mean for you? That means that time is on your side! 

Your goal is to get the debtor to admit the debt and/or agree to a payment plan of some sort. If you send an e-mail, print out any responses you receive. If you call on the phone, think about recording it or having a witness to the conversation (have the phone on speaker or another party listening in on another line if possible). If you send a (demand) letter, send it certified with return receipt requested but also send it regular mail. If the certified comes back as unclaimed but the regular mailed letter does not, then you can be reasonably sure that the person has received your notice but then follow up with a phone call or a "next step" letter (i.e. small claims, notice of intent to sue, etc.).

Be prepared for any phone calls that may happen, whether initiated by you or by the customer. Have copies of all invoices (signature copies are the best!), agreements, returns, etc. that pertain to the debt at the ready so that you can provide copies to the customer. You might consider having a script ready to respond to any questions or concerns that you think might arise during the conversation. So a phone conversation might go something like this:

"Hello, Mr. Smith! My name is Joan and I'm calling from XYZ Company regarding a past due balance you/your company has with XYZ Company."

"Not sure what you mean, Joan. We haven't purchased from you in X years."

"That is correct. This is an older debt, dated January 1, 2013. Our system shows this invoice as being unpaid for that product/services for project X."

"Huh, well, I don't know anything about that."

"I'd be happy to send you copies of the information for your review. Is there an e-mail address or fax number that I can send these too?"

"No, I don't think we owe you anything. Besides, even if we did, it's been too long ago."

"Actually, Mr. Smith, we have four years to collect on any outstanding, unpaid debts. Unless you can provide documentation, such as a credit card receipt or canceled check that proves this debt was paid, we are assuming that is has not and are giving you the opportunity to clear this debt, without penalty, today."

"Well, I would have to research this!"

"I totally understand, Mr. Smith. Let me send over the copies that I have so that you may review them and look through your records. I'll send them over right now so that I can confirm that you've received them. Then, if I haven't heard back from you by Friday next week, I will follow up to see what you've found out."

"Uh, okay. I still don't believe that I owe you anything."

"Well, that may be the case. And should you find proof of payment or return, please be sure to send that information over to me as soon as possible so that we can get this resolved. I really appreciate your time and assistance in this matter."

One point to remember here is to keep things light. Don't get distracted by accusations or allow yourself to be pulled into an argument - stick to the fact that there is an outstanding debt that needs to be paid. 

Now, if all goes to plan, you should receive a phone call or e-mail from your customer in which they will inform you that, while they acknowledge the debt, they aren't able to pay it in full at this time OR they acknowledge the debt and will be paying with credit card or check. 

If they are unable to pay the amount in full, ask if they can make a "good faith" payment - even $50 and then you can put together a simple repayment document that specifies the date and amount each payment will be made or have your attorney put together a Confession of Judgement for you. Either way, be sure that the agreement has a place for the customer's signature, printed name, date and required notary stamp. This agreement should also include any interest or finance charges, attorney's fees or court costs. This document can be presented in court should the account go in default again. 

You can also request auto payments or payments that you process on the same agreed upon date, whether credit card or ACH, so that you have your payment. This way, the only time you would need to have contact with the customer is if the payment didn't go through for some reason.

Now, I know this sounds laborious but, you're only out the time of a phone call or the cost of a certified letter. But, if you collect the old debt, or even part of it, that's money you can put back into your companies coffers and that's just like icing on the cake!