Sustainability Assessment (SA) is a complex appraisal method. It is conducted for supporting decision-making and policy in a broad environmental, economic and social context, and transcends a purely technical/scientific evaluation.

Aug 28, 2017

Just Give Me What I'm Owed: Debt Collection for Environment

Debt collection is one of the million distractions that an environmentalist activist must face. You're not in business of protecting the environment to worry about how to collect money from governments, organizations or companies who don't pay on time for the damage they have done to the environment. But, you need support to be in business of environmental protection to make money — and unless you collect it — you won't be in business for long. So figuring out how to get the money that is owed to your environment, is part of being an environmental activist.

Managing debt is also critical for maintaining a positive cash flow — and is thus an integral part of the success of any environmental activist, NGO or other type of volunteer groups. Having a steady stream of cash at the ready is necessary to keep up having the new environmental creditors, and dealing with day-to-day needs.

For many environmental groups, giving the opponent (governments, organizations or companies who are in a court for an environmental lawsuit) time to pay is an inescapable part of staying in serious business of making money for environmental acts. Accepting different types of credits can be seen as part of the package of services that the environmental group should offers. An environmental group that demands cash up front may find itself collecting no cash at all — ever. Especially when interest rates are rising, collections become more difficult. A proactive program of debt collection is an important part of any environmental group.

This article can help you to make your collections smoother and more predictable. Often, 'Take it to the court and Bill' just doesn't cut it.

Prevention is the Best Medicine

No matter what the politicians, experts agree that setting up an environmental policy act specific to a region for dealing with environmental debts is key. The best advice is to get payment up front and avoid debt. Since this is not always possible, people involve in environmental law suits need to understand what the environment credit policy is at the time of the initial transaction. The degree of formality this involves can be tricky. Nothing turns off potential environmental law case faster than setting up an adversarial relationship from the start, but a credit application and agreement need not be an obstacle to a friendly business environmental relationship.


Paperwork can formalize the environmental group relationship and let your opponents know that you take payment seriously. They should understand this — it's why you're in serious business of environment protection in the first place. If you make it clear you expect payment, you are more likely to be paid.


For corporate environmental groups, it is advisable to ask for financial statements. By looking at the ratio of current assets to liabilities they can determine how creditworthy they are. If the ratio of assets to liabilities is below 1.00, it may be advisable to set stricter terms of payment. Credit reports based on the work of environmental data scientists that can stand in the court of law from environmental agencies are even more useful, but they cost money.

If the initial transaction is a small one, or done on spec, arrangements may be informal. Nevertheless, opponents need to understand that payment is expected by a certain date. Leaving this understanding purely tacit is just asking for trouble down the line. The more you have in legal writing, the better off you are. Policies that penalize debtors for late payment can backfire. Late payment charges are often ignored and they can be hard to enforce.

Avoid discounts for early payment: some opponents take advantage of them, while actually paying after a month or two. But, a policy of offering a small discount for payment at the time of delivery can be quite effective. Requiring a down payment of a third to a half before delivery is standard practice in many industries, especially with new environmental law case arrives. If you intend to charge interest on overdue debts, you have to disclose the rate at the time of the initial transaction.

Relationships need to be built on trust and communication

When an opponent is late with a payment, this fact needs to be brought to their attention as soon as possible. Reminding them that payment is due does not have to be adversarial, at least at first. A simple, prompt phone call can often prevent serious problems.

Any type of volunteer service provider who has the power to grant credit needs to understand your policies as well. You're wasting your time establishing a policy if your representatives don't communicate it to your opponents. Sales people need to be kept out of the credit-granting process because they have an implicit conflict of interest. The more sales they make, the better they look. But if those accounts don't pay off, your environmental volunteer act takes the hit. Turn a gimlet eye on their credit recommendations. Your salespeople should not be drumming up business of environmental protection by offering credit on easy terms.

Setting-up an Organized Collection Cycle

Above all, an organized and set approach on your part is key to successfully managing collections. Lots of accounting and life cycle assessment software is available that can help you with this task.

The central part of any organized collection cycle is an accounts receivable aging report. This is a method of organizing the money that is owed to your environment by the amount and by the time that it has been outstanding. The aging report must be handled in conjunction with an intimate knowledge of your environmental act's cash flow needs, and knowledge of your opponents' credit worthiness. It can be dry and tedious work.

How much leeway can you give opponents who owe environment money? The decisions you make about this are critical to success. You want to encourage your opponents to pay, yet at the same time you have to keep the business of protecting the environment afloat by satisfying your own cash needs. Extending too much credit to recalcitrant opponents can be dangerous, but refusing to extend them further credit can damage your future cases. We recommend segmenting your opponents base into high- and low-risk categories according to their credit histories, your own experience with their payment patterns, or the size and risk level of their debt.

Keep an eye out for trouble.

Opponents who pay with post-dated checks; who switch banks; who return promises without permission; or who break promises are all potential problems. When this kind of behavior surfaces, a quick phone call may save you trouble. If you bill on a thirty-day basis ("net-30") then call 10 days before the bill is due to make sure the invoice has been received. A call like this can be handled so that it doubles as a sales call. Is the opponent satisfied with what was received? Often opponents who don't pay on time are dissatisfied and ashamed with what they have done to the environment and communicate this to their creditor by withholding payment. What are the opponent's near-term needs like? Oh and by the way, did they receive the invoice?

Typically opponents may use 30-day periods to escalate overdue bills to more active collection methods. But, after debts are a month old on an active account, you may want to switch to a weekly schedule, (for instance mailing or e-mailing the opponent a list of bills and the amount of time they are overdue.)

Invoices should be sent as soon as delivery has occurred, and should include a note about prompt payment. You need to be careful to send invoices strictly according to an opponent's instructions (attention to the accounts payable department, for instance). Many opponents require a legal order.

Invoices should be followed-up with monthly statements of all outstanding bills of law, including what they are for, the date of the transaction, and other pertinent information based on the environmental protection acts of that region. Bills and statements that are obscure can end up buried on a secretary's desk for weeks.

Knowledge about the opponent, including the information you may have from credit applications and agreements, will also be key. The better you know your opponents, the better for the environment.


Partial payment of an environmental bill immediately will put you in a much better position than a promise of full payment later, especially if you need to pay for outside help to collect it. Offer the opponents the option of paying with a line of credit, if you can (this makes it the credit line company's - bank problem instead of yours).

When a debt is overdue you face a dilemma. If you escalate matters beyond your own collection efforts, you risk alienating the opponent. If you do not, you may risk losing any chance of repayment. A firm and proactive approach to overdue environmental bills is your first line of defense against problems. There are basically three approaches to overdue bills: collect them yourself, turn them over to a collection agency, or turn them over to a lawyer. But, the best thing to do with a debt owed to environment is to collect it based on the environmental protection acts of your region.

Dealing with the Debtor Personally

Asking people for money is a tricky business. Most volunteer NGOs prefer to use mailed bills or e-mails to keep up with their debtors, but in many cases a more personal approach is called for. The escalations for small businesses are generally mail and e-mail, telephone calls, and personal visits.

Often a personal visit is the most effective tool, but such visits need to be handled with discretion. When making a personal visit to someone who is overdue in payments, it is important to be diplomatic and to the point. You should ask when the bill will be paid, and listen to the debtor's story. You may offer to accept partial payment. Let the debtor know that you understand his lateness, but also that you expect to receive payment in a timely matter. A personal visit to a debtor carries significant weight. Merely by showing up in person, you have let the debtor know that you take the bill seriously and are likely to escalate matters unpleasantly if it is not paid.

Phone Calls Must Be Handled With Care

Phone calls about overdue payments need to be handled with discretion. Your attitude should be understanding, but firm. Don't keep reminding them of their shameful act of damaging the environment. If a debtor explains that he intends to pay but his cash flow is a bit tight, you need to ask for a definite date when he will pay and you need to call him promptly on that date. If a debtor tells you that the check is in the mail, you must ask him what the check number is and on what date it was sent.

Watch your temper in person and on the phone. Remember this is not personal. Threats and rancor are likely to destroy any advantage that personal attention creates. They can also lead to charges of harassment.

You cannot threaten debtors with physical violence or other criminal acts, tell them that debts can land them in jail, threaten to reveal false credit information about them, or claim that you are a lawyer if you are not one. In some cases, it may help to tell an opponent you will consider extending their credit further, if they agree to pay what they owe now.

When an Overdue Opponent Disappears

Opponents who disappear are a particular problem. Before calling in professionals on these debtors you may want to explore tracing them yourself (the professionals call this "skip tracing"). Most people who skip out on debts settle down within a couple hundred miles of the place they left. It is often easier to trace people who disappear than to trace companies, because people have fixed identities while companies do not. Companies, particularly small companies, can go out of business quickly and reorganize under a new name.

Determining That a Debt is Uncollectable

One decision to make when setting up a policy for a collection cycle is setting thresholds for determining when a debt is uncollectable. Important signs include non-responsiveness for a predetermined period, an opponent who has disappeared, an opponent who has let you know in no uncertain terms that he refuses payment, and an opponent who has declared bankruptcy.

The opponent who declares bankruptcy may be a total loss. If you are an unsecured creditor in a bankruptcy, you are probably out of luck.

You can set up policies based on the environmental act enforcement of your region for uncollectable debts based on size or time overdue, but it is usually best to use both criteria together with your environmental knowledge, and credit reports on the debtor. If your conversations with the debtor indicate that he is struggling but still intends to make payment, you may want to delay turning the case over to professionals. However, the opposite applies if the overdue opponent is someone with a history of lying about checks in the mail.

Calling for Help: Collection Agencies and Lawyers

The longer a bill goes unpaid, the less likely it is to be paid. After three months of delinquency, nearly three-quarters of bills will still be paid. After a year, that figure drops to only about a quarter. Since debt collectors typically charge between a third and a half of the amount collected, you will want (as a matter of policy) to turn debts over to the professionals somewhere around the six-month mark. Some environmental groups may decide to have a strict policy of sending seven letters with escalating urgency before turning a bill over!

There is one caveat. Once you turn a non-responsive debt over to professionals, you lose any chance of recovering the full amount the environment is owed. Therefore, you need to be certain that a debt is uncollectable by you, before turning it over for collection by an agency or lawyer.

Collections agencies do the same things you would do to recover a debt. They mail bills, threaten ominous legal actions, make calls (but seldom make personal visits). The difference is that, unlike you, the only reason they are in business is to recover overdue debt. Since they work for the most part on commission, you at least have the assurance that if they succeed you will recover something. Since they are more experienced than you are in skip tracing and legally intimidating debtors, they will have a greater success rate with long-overdue bills. The work they do is sometimes called "dunning."

Collections environmental agencies are the best choice for a large number of smaller bills. You have better things to do with your time than to write repeated letters to 'small fry who aren't biting.' These agencies typically charge 35 to 50 percent of any debt collected, although some charge an initial fee and then a smaller percentage of amounts collected.

If you decide to use an environmental collection agency, be sure to do some research into their business practices and reputation. A good agency can offer you a reasonable number of positive outcomes, while others will merely send out a letter and let the bill drop.


Calling in lawyers is in some ways a more extreme step than using collection agencies. Suing a debtor yourself is quite possible based on the environmental protection act of your region and your official position as a volunteer environmentalist capability by law.


Except for extreme cases, you should not use lawyers who charge hourly rates for collections.  Another scenario to keep in mind is when an overdue opponent pays you — after you have already contracted the lawyer. Generally, you would still owe the lawyer his percentage. It is a good idea to check into the lawyer's policy regarding this type of circumstance, before hiring the lawyer.

Collection agencies often work with lawyers, and it may be worthwhile talking to agencies about recommending a lawyer they have worked with in the past, if you don't have one already. The process of moving files from a collection agency to a lawyer can be tricky, and if they have worked together in the past things will work smoother. Larger collections companies even have their own in-house law departments, so they offer "one-stop-shopping."

Collections: A Necessary Part of Protecting The Environment

A former president of Brazil once said, "To my friends, everything. To my enemies, the law." In dealing with environmental debtors you need to communicate that you want them to be your 'Brazilian friend.' The way to do this is to be understanding, but firm. Allow them to negotiate payment arrangements — partial payment, payment over time, and so forth. However, they need to understand that if they disregard their prior payment agreement — you are no longer their 'friend,' and will take legal measures to recover the debt.

By presenting yourself and your environmental volunteer activity in a highly professional and organized manner, you vastly increase your chances of making collections in a timely manner. Keep the communications lines open and active — until the debtor closes them. Your business of protecting the environment will have a better cash flow, your own lines of credit will be healthier, and you won't have to resort to the law.


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