Before you spend time, energy, or legal fees chasing a past-due account, you must answer one question:
Can they actually pay?
Verifying a debtor’s financial condition is a critical step between internal collection and escalation.
In this article, Paul Boyce, a commercial collections expert with over 30 years of experience, explains how to evaluate a debtor’s ability to pay — ethically, efficiently, and legally.
Why Verification Matters
Too many companies waste resources pursuing uncollectible debt.
A simple, documented verification process helps you:
- Avoid spending on futile legal action.
- Identify accounts worth pursuing aggressively.
- Strengthen settlement negotiations with credible evidence.
- Support future claims with verified financial facts.
“Before you fight for payment, confirm there’s something to collect.”
Key Ways to Assess a Debtor’s Ability to Pay
1️⃣ Review Payment Behavior
Start with internal history.
Has the customer made partial payments, or have they gone completely silent?
Recent activity often signals whether cash is available.
2️⃣ Analyze Public Records
Search corporate filings, UCC records, judgments, and liens.
Active liens may indicate that other creditors already have claims on available assets.
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3️⃣ Verify Corporate Standing
Check the Secretary of State website in the debtor’s home state.
An “inactive,” “suspended,” or “dissolved” entity may no longer exist legally.
4️⃣ Conduct a Business Credit Report
Pull from sources like Experian Business, Dun & Bradstreet, or Equifax Commercial.
These reports reveal credit utilization, trade experiences, and public filings.
5️⃣ Use Bank & Trade References
Request updated references through your credit application or as part of a settlement discussion.
Compare their current tone with prior recommendations.
6️⃣ Look for Signs of Distress
Negative press, layoffs, or sudden address changes can signal cash-flow trouble.
Social-media activity and industry forums sometimes reveal early warning signs.
Ethical & Legal Boundaries
Always ensure that verification stays compliant:
- No harassment or repeated contact beyond lawful limits.
- No false representation of authority or legal status.
- No use of private data obtained without consent.
When in doubt, consult or partner with a licensed commercial collection agency familiar with privacy and Fair Debt Collection standards.
How to Work Effectively With a Collection Agency
Expert Insight from Paul Boyce
“Financial verification isn’t about suspicion — it’s about strategy.
Knowing who can pay helps you focus on accounts that will pay.”
🔗 Related Articles
- Documentation Mistakes That Cost You Collections
- Using Technology to Improve A/R Recovery
- How to Work Effectively With a Collection Agency
Key Takeaways
- Verifying a debtor’s ability to pay protects your resources.
- Use public data, trade references, and credit reports to gauge solvency.
- Maintain full compliance and documentation during the process.
- Escalate intelligently once you confirm collectability.
Need Clarity Before You Escalate?
Get a confidential review with Paul Boyce, Commercial Collections Expert.
If you’ve confirmed a debtor’s solvency but can’t secure payment, I can connect you with a licensed commercial collection agency that handles these matters ethically and effectively.