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Both state and federal law are very protective of consumers who owe debt. Under the terms of these laws, creditors must adhere to strict debt collection procedures or risk being sued for unfair collection practices. One of the best ways to avoid the often arduous collection process is to develop due diligence procedures when extending credit to new customers. Exercising care when accepting new payment terms from customers can help businesses avoid future problems with debt collection, so if you are concerned about extending credit to customers and the possible repercussions of debt collection, it is vital to speak with an experienced Florida business law attorney who can advise you.


By extending credit to new customers, business owners provide them with the opportunity to purchase their services or products immediately while paying later on down the road. Although credit card companies manage the risk of a business’s decision to begin accepting payments via credit card, it is the business itself who is responsible for verifying and accepting payments when credit is extended through personal checks or invoices. For this reason, it is important to consider a variety of factors before deciding to extend credit. For instance, although the option of being able to pay at a later date enhances customer relations and may generate more sales, it also means that a business may have to take part in a long settlement process if payment is not received. Extending credit may have additional positive effects, including:

  • Increasing customer loyalty,
  • Establishing trust with new customers;
  • Increasing revenue;
  • Gaining a competitive edge over other businesses who do not offer credit; and
  • Enhancing a business’s reputation.

However, there are also cons to extending credit to customers, including:

  • Late payments;
  • Negative effects on cash flow;
  • Having to pay collection fees; and
  • Managing accounts receivable, which includes handling late payments and invoice disputes.


Because there are so many risks involved with extending credit, it is critical for businesses to create detailed policies and credit processes beforehand by:

  • Deciding whether to extend credit to individual customers or only to other businesses;
  • Running credit checks before agreeing to extend credit;
  • Developing and explaining clear payment guidelines, such as including a due date on the bill as well as a phone number to contact regarding questions or concerns;
  • Deciding whether to bill customers or hire someone else to send invoices;
  • Drafting a plan for collecting late payments; and
  • Providing customers with a copy of the payment policy, which should include information on penalties for late payments and the process of collecting unpaid debts.

If, after balancing the pros and cons of extending credit, a business decides to issue invoices to creditworthy customers, it should be careful to describe the products or services rendered in clear and concise language on the invoice itself and to include the following information:

  • The time period that the customer has to make the payment in bolded or offset lettering;
  • How and to whom payments are to be made; and
  • Contact information that customers can call if they cannot make a payment.

Having this information on the invoice or bill itself will keep customers informed of important dates, while also making it difficult for them to use ignorance as a justification for lack of payment.


While the Fair Debt Collection Practices Act (FDCPA) only applies to debt collectors and third party debt buyers, Florida’s Consumer Collection Practices Act (FCCPA) also covers original creditors. For this reason, it is important for Florida business owners who extend credit to customers to have a firm understanding of the protections outlined under this law. For instance, the FCCPA prohibits business owners from taking the following actions:

  • Telling someone else about the existence of a debt that the customer is reasonably disputing without telling that person of the dispute;
  • Communicating with a customer’s employer before a final judgment has been obtained;
  • Disclosing information to someone other than the customer that would affect his or her reputation unless the other person has a legitimate business reason;
  • Communicating with a customer who owes a debt or any member of his or her family frequently enough that it could reasonably be considered harassment;
  • Using a communication that appears to be authorized or issued by the government or an attorney when it is not;
  • Advertising a customer’s debt as a means to enforce payment;
  • Posting a list of names of customers who owe a debt;
  • Mailing a communication in an envelope with words on the outside that are meant to embarrass the debtor;
  • Communicating with a customer between 9:00 p.m. and 8:00 a.m. without his or her consent; and
  • Communicating with a customer if the business owner knows that the debtor is represented by an attorney and has the contact information of that attorney, unless the attorney does not respond within one month, the attorney consents to direct communication, or the debtor initiates communication.

Many of these requirements are somewhat open-ended and an unsuspecting business owner could easily violate one unintentionally, which makes it doubly important for Florida business owners to obtain the advice of an experienced business law attorney before extending credit to someone or beginning the collection process.


A business owner who violates the FCCPA risks being held liable for actual damages as well as statutory damages, court costs, and attorney’s fees. Courts also have discretion to award punitive damages. However, if a defendant can establish by a preponderance of the evidence that he or she did not intentionally violate the law, he or she can be absolved of any liability. Additionally, if the court finds that a plaintiff failed to raise a legitimate issue of law or fact, he or she could be required to pay the defendant’s court costs and attorney’s fees.


If you are a Florida business owner and are considering extending credit to customers or have other questions or concerns about debt collection, please contact the legal team at Clearwater Business Law. We are available by email and by phone at (727) 314-3867.

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