I was asked a question today that I must have been asked at least hundreds of times over the years: how long should you wait before suing a subscriber for default?

The answer is simple for me to answer but often difficult for you to accept. There is no time frame that should be rigidly followed. So the 30, 60, 90 day letters of default preceding a referral to your attorney for another set of threatening demand letters is not always the best approach. Rather, each subscriber should be gauged based on its own history of payments together with explanation for the current default.

What do I mean by that?   You may first adopt a general policy for delinquent accounts. The 30, 60 and 90 day letters is a reasonable approach. Each letter becoming increasingly less understanding on your part and demanding payment, possibly explaining the consequences of your not receiving a check by a date certain. This policy is particularly useful if you have a large subscriber base and an in house collection staff.  

A more individual approach is possible when you are a smaller company and have a personal relationship with your subscribers. Under that circumstance you should know a subscriber's payment history and any notable change in that payment practice is worthy of your attention. For example, if your subscriber typically pays within 15 days of getting your invoice, or you don't send invoices and you get your payment promptly each month by the 15th, and you don't get that payment on time, you should call and find out why. Any explanation other than it's been lost  in the mail is cause for suspicion. The answer may in fact be cause for concern and you might need to decide whether to ride out tough times for  that subscriber or call the contract into default and be one of the first  creditors to demand payment. It's often the first and most aggressive creditors that wind up getting paid.

Getting tough with your subscribers has an obvious downside, the potential loss of a subscriber who might have stayed in business and continued as a loyal customer. The is a balancing act that you, or your collection personnel need to learn and then apply.  

One final bit of advice, stay professional throughout your  collection efforts, follow through on your "threats" and try and stay friendly. There are laws that apply to collection efforts (Fair Debt and Collection Practice Act - which is Federal - and a whole slew of consumer laws), and you need to know them and you need to be sure that your attorneys know them. But aside from the laws, you don't want your  collection efforts to become a personal contest between you and your subscriber. Once it is personal, once you manage to so annoy your subscriber so that he begins to hate you, you are not going to get paid, and the subscriber is likely to prefer paying his lawyer to resist you rather than pay you anything. So, ask for you money, and if you can't  get it in what you consider a timely fashion, send it over to your lawyers to start a collection action. You will recover more money that way and save more subscribers that way too if your attorney is sensitive to that possibility and knows it is the result you would like to achieve in addition to recovering the arrears.