Most of us appreciate how reliable our customers are at paying for services. However, once in a while, one gets away from us and we find ourselves with a collection issue.  Insider asked attorney Richard Rothfelder for advice on dealing with delinquent debts.  Today, Richard talks about what to do before we have collection issues.  Tomorrow he discusses the specifics of collection and getting paid.

Outdoor advertisers, like any service oriented business, often suffer delinquent accounts. Depending on the financial stability of the outdoor advertiser, and its ability to carry outstanding and sizable accounts receivables, the billboard company should start looking at alternatives for the collection of these delinquent debts within 30 to 60 after they become due.

Indeed, the prudent outdoor advertiser should anticipate and plan against delinquent accounts before they become a problem. The easiest and most common means for avoiding collection problems is to investigate the customer before contracting with him. A thorough credit application, with references to other service providers who can vouch for the credit worthiness of the customer, should be utilized for new or questionable advertisers.

Provisions in the advertising contract can also minimize the risk, if not head off collection problems before they develop. For example, the outdoor advertiser can require the customer to pay for production of his ad, along with one or more months of displaying it in advance. The contract should certainly allow the outdoor advertiser the right to remove the ad, and pursue legal remedies for payment if the account becomes outstanding over 30 days. The contract should also provide that, in the event the customer breaches it by failure to timely pay the account, the ad can be removed, but the customer remains liable for the full term and amount owed under the contract (such as 90, 180, or 365 days contractual term). And, of course, the attorney’s fees of the outdoor advertiser, as well as the rental charges remaining during the term of the contract, should be payable by the customer under the terms of the advertising contract.

If, despite all of these cautionary efforts, an outdoor advertiser can get stuck with an outstanding and sizable account.  We will talk more tomorrow about what to do next.

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