Small Business Salute: Protecting Your Receivables from the Start
NBDR: Unpaid invoices don't just hurt cash flow — they threaten survival. This guide shows small business owners the proactive steps that make debt recovery faster, cheaper, and far more likely to succeed. From contract language to collection timing, every decision you make before a client defaults determines how much leverage you have after. Why Small Businesses Lose More Than They Should Small businesses extend credit every day — to customers, clients, and vendors they trust. Most of the time, it works. And then it doesn't. A client goes quiet. An invoice ages past 60, then 90, then 120 days. By the time the business owner picks up the phone to do something about it, the leverage they once had has quietly slipped away. The problem isn't the decision to extend credit. The problem is what wasn't put in place before the relationship started. No written contract. No personal guarantee. No clear payment terms. No defined consequence for non-payment. When those elements are missing, recovering what you're owed becomes significantly harder — and more expensive. At Marcadis Singer, PA, we've spent nearly 50 years helping Florida businesses recover money they're owed. We've seen every variation of this story. And the businesses that recover the most, the fastest, are almost always the ones that built their receivables protection into the front end of every transaction — not the back end. Start With a Contract That Actually Protects You A handshake deal or a one-page invoice is not a contract. It's a hope. If you're extending credit to a customer — in any amount, for any reason — you need a written agreement that clearly defines the terms of repayment and the consequences of default. At minimum, your contract should include: - Payment terms: Due dates, acceptable payment methods, and late payment thresholds. - Interest on overdue balances: Florida law allows creditors to charge interest on unpaid amounts. Your contract should specify the rate so there's no dispute later. - Attorney's fees provision: A properly drafted fee-shifting clause means that if you have to sue to collect, the debtor may be responsible for your legal costs. This changes the economics of recovery dramatically. - Personal guarantee: If you're doing business with an LLC or corporation, a personal guarantee from the owner or principal means you have a real person on the hook — not just a shell entity that can be dissolved or drained. - Jurisdiction and venue clause: Specify that disputes will be resolved in Florida and in the county where you operate. This eliminates a major tactical weapon debtors use to delay or avoid collections. If your current contract doesn't include all of these elements, now is the time to fix it — not after the next customer defaults. Know Who You're Extending Credit To Due diligence before extending credit is not optional — it's essential. A simple credit application, reviewed before you extend any terms, can reveal whether a potential customer has a history of slow payment, outstanding judgments, or financial instability that should give you pause. Your credit application should collect: - Legal name of the business and any DBAs (doing business as) - State of incorporation and registered agent information - Owner or principal names and contact information - Bank references and trade references - Authorization to run a credit check - Signature confirming accuracy and agreeing to your payment terms This information does two things. First, it helps you make an informed decision about whether to extend credit at all. Second, it gives you a roadmap if you ever need to collect. You'll know where to find the debtor, who the principals are, and where assets might be held. Invoice Discipline Is Receivables Protection Sloppy invoicing is one of the most common and most preventable reasons that collections become difficult. If your invoices aren't accurate, timely, and clearly communicated, you hand the debtor a built-in defense: "I never received it," "the amount was wrong," or "I was waiting for a corrected invoice." Build a tight invoicing process: - Send invoices immediately upon delivery of goods or services — not at the end of the month. - Include a clear due date, not just "Net 30." - Reference the underlying contract or purchase order number on every invoice. - Send invoices to the correct contact — the person who actually approves payments. - Follow up on unpaid invoices at 15 days, 30 days, and 45 days with written reminders that create a documented paper trail. That paper trail matters. When a collection matter proceeds to litigation, documentation is leverage. Every email, every invoice, every written reminder strengthens your position and weakens theirs. Act Early — Delay Is the Debtor's Best Friend The most expensive mistake small business owners make is waiting too long to escalate. At 30 days past due, most debtors can still be reached and motivated to pay. At 90 days, they've often moved on — sometimes literally. Assets have shifted. Bank accounts have changed. Entities have been restructured. Florida law gives creditors meaningful tools to recover debts — but those tools work best when applied early. A well-timed demand letter from a creditors' rights attorney carries far more weight than a string of calls from your accounts receivable team. It signals that you are serious, that you have counsel, and that legal action is imminent if payment is not made. If the demand is ignored, the next step is typically filing suit. Winning a judgment is only the beginning of enforcement — but it is the foundation. With a judgment in hand, your attorney can pursue wage garnishment, bank account levies, and liens on real property. The earlier you act, the more of those tools remain available and effective. Build a Relationship With a Creditors' Rights Attorney Before You Need One The businesses that recover the most from delinquent accounts are not the ones that scramble to find an attorney after the situation has deteriorated. They're the ones that have already established a working relationship with a firm dedicated to creditors' rights — and who know exactly what to do when a payment problem first surfaces. Having that relationship in place means faster action, lower friction, and a collection strategy calibrated to your specific industry and customer base. It also means your contracts, credit applications, and invoicing procedures can be reviewed before there's a problem — not after. Marcadis Singer, PA has represented Florida creditors for nearly five decades. We work with small businesses, regional lenders, and national companies — and we bring the same relentless focus to every matter. Our attorneys understand the full lifecycle of a receivable, from the contract that creates it to the enforcement action that collects it. Frequently Asked Questions How long do I have to collect a business debt in Florida? Florida's statute of limitations for written contracts is generally five years from the date of default. For oral agreements, it's four years. While those windows sound generous, waiting too long makes the practical work of collection — finding the debtor, locating assets, enforcing judgment — significantly harder. Act well before the deadline. Do I need an attorney to collect a business debt in Florida? For small amounts in small claims court, you can represent yourself. But for any commercial debt of meaningful size — particularly if you anticipate a dispute or if the debtor is an entity rather than an individual — working with a creditors' rights attorney dramatically improves your odds of full recovery. The cost of counsel is often recovered through attorney's fee provisions in your contract. What is a personal guarantee, and why does it matter? A personal guarantee is a signed commitment from an individual — typically a business owner or principal — to be personally responsible for a business debt if the company doesn't pay. Without a personal guarantee, you may only be able to collect from the business entity, which can be dissolved, drained of assets, or restructured to avoid payment. A personal guarantee eliminates that escape route. What can I do if I already have a judgment but can't collect? A judgment is a legal determination that you are owed money — but it doesn't collect itself. If the debtor is not paying voluntarily, your attorney can pursue enforcement through bank levies, wage garnishment, liens on real and personal property, and examination of the debtor's finances through post-judgment discovery. In Florida, judgments remain valid and enforceable for 20 years and can be renewed. Can Marcadis Singer help me set up better credit and collection procedures for my business? Yes. Beyond handling active collection matters, our attorneys work with business clients to review and strengthen their credit agreements, contract language, and collection protocols. Preventing a problem is always more efficient than resolving one. Contact our office to discuss how we can help protect your receivables from the start. Marcadis Singer, PA represents creditors throughout Florida. To speak with an attorney about your receivables, contact our office at marcadislaw.com. dis Singer, PA represents creditors throughout Florida. To speak with an attorney about your receivables, contact our office at marcadislaw.com. Read the full article