How To Handle Difficult Debtors In The Cannabis Industry
By Brett Gelfand
As the cannabis sector expands, so does the number of debtors. Unfortunately, not all debtors are simple to work with. Some people can be difficult, uncooperative, and even nasty. In the cannabis industry, dealing with tough debtors needs tact, patience, and expertise. Here are 6 methods for dealing with tough debtors in the cannabis sector.
1. Be Proactive in Debt Management.
Being proactive in handling problematic debtors is one of the greatest methods to deal with them. You may do this by establishing clear payment conditions and expectations from the start. Ensure that your debtors understand the payment conditions and are aware of any late payment penalties. Also, put a system in place to track payment deadlines and follow up with debtors when payments fall behind.
2. Clear and effective communication
Effective communication is essential when dealing with troublesome debtors. Communicate with debtors in a clear and simple manner, and ensure that they understand what is expected of them. Avoid using excessively technical or legal terms that might confuse or frighten borrowers. Also, listen to their issues and respond to them in a timely and professional manner.
3. Maintain a professional and courteous demeanor.
It is critical to keep a professional and friendly manner while dealing with troublesome debtors. Even if the debtor is difficult or unwilling, avoid becoming upset or combative. Keep in mind that your purpose is to recover the balance, not to get into a personal feud. Maintain a courteous tone throughout the process and stay focused on the subject at hand.
4. Keep a record of everything.
It is critical to document everything while dealing with problematic debtors. Detailed records of all communication, including phone conversations, emails, and letters, should be kept. Make copies of all invoices, payment records, and other pertinent papers. This will help you construct a solid case if you need to send the claim to collections or if legal action is required.
5. Understand When to send A/R to a Debt Collection Agency.
Knowing when to send A/R to collections is critical. Despite your best efforts, it sometimes feels impossible to recover on an invoice. Have a plan and come up with a timeline that everyone in your team knows of when in-house collection efforts should end and a claim must be sent to collections. We usually recommend sending claims to collections after 60-90 days of past-due accounts. Have a final letter sent to the debtor explaining that if the account is not paid by ‘x’ date, you will be forced to send the claim to a debt collection agency.
6. Be prepared to go to court.
If everything else fails, you may need to explore legal action to recover the debt. Before proceeding, ensure that this is what your trusted cannabis debt collection agency recommends. A good cannabis debt collection agency should only recommend legal actions after exhausting all collection efforts. CannaBIZ Collects charges a contingency fee for legal actions, which means you only pay if the case is won. This protects you and your company from big losses and having to pay hourly rates.
Dealing with problematic debtors in the cannabis market needs a mix of patience, professionalism, and efficient communication. You can effectively manage difficult debtors and protect your business interests by being proactive in managing them, communicating clearly and effectively, remaining professional and courteous, offering solutions and flexibility, and being prepared to send to your trusted cannabis debt collection agency when needed.
About Author: Brett Gelfand
Brett is an accomplished entrepreneur in the cannabis industry, with a talent for building successful brands and businesses. His career began in 2015 as CEO of a vertically integrated cannabis company in Colorado, where he gained extensive knowledge of the industry.
Later, Brett co-founded, PAQcase, a specialty child-resistant cannabis packaging business and served as CEO, successfully developing innovative packaging solutions that established the company as a leader in the space. His leadership and strategic vision were instrumental in achieving a successful exit in 2022.
Currently, as Managing Partner of CannaBIZ Collects, the nation’s first and leading cannabis collection agency, Brett leverages his expertise to help cannabis businesses navigate the complex legal and financial landscape related to credit and collections.
With a BBA in Finance from The University of Georgia, Brett brings a unique blend of business acumen and financial expertise to his work. Passionate about driving innovation in the industry, Brett continues to explore new opportunities and mentor aspiring entrepreneurs from his home base in St. Petersburg, FL.