Every small business owner knows the risks involved when you start selling your products or services on credit. Your customers may not intentionally set out to delay paying you, but if you are not careful, you could end up with a rather huge list of accounts receivables. And if those accounts receivables are not paid in a timely fashion, it can play havoc with your budget and your cash flow projections.

Short of saying “cash only” to your customers, what can a small business owner legally do to collect debts that are owed to them? How many reminders and late notices can you send out before you find yourself violating the law?

The Fair Debt Collection Practices Act requires that any business that attempts to collect a debt treat people fairly and prohibits certain methods of debt collection.

After you have exhausted the standard methods of attempting to collect on a debt, you need to know the limitations that may apply to your particular situation. Specifically, anyone who attempts to collect a debt can contact the party in person, by mail, telephone, telegram, or fax. The law does protect the debtor from being contacted at “inconvenient” times, such as before 8 a.m. or after 9 p.m., unless given permission to do so. Also, be advised that you are prohibited from contacting a debtor at their place of employment if their employer disapproves of such contacts.