When collecting a commercial debt, the decision whether or not to take a settlement comes down to one thing …

In Commercial Debt Collection, sometimes a settlement is the right choice.

If it’s likely that your customer will be unable to honor an extended payment plan. To know for sure, you must find out the facts of your customer’s financial situation.

Start with a lengthy and detailed conversation with your customer. Listen intently to his explanation and take detailed notes.

While you’re on the phone, request that he send you his last 6 months worth of Merchant Statements. Once you have all the information you can get from him, take the following steps:

• Review his Merchant Statements to spot downward trends in credit card sales. Are they up or down?
• Verify the claims he’s made by contacting his other creditors. Did he tell them what he told you?
• Talk to your customer’s bank. Would a check clear if he were to issue one?

The information you gather may lead you to conclude that your customer really has no money (or too limited an amount) to pay you. If it looks to you like things are likely to continue to deteriorate, then taking a lesser amount now is better than being paid nothing later. It’s but one of the challenges of commercial debt collection.

It takes patience to do the investigative work to make the settlement decision in the process of commercial debt collection. But it’s the only way to make an informed choice.