If you are in the unfortunate position of collecting commercial debt, chances are you may not know where to start. Collecting commercial debt can be very intimidating, you rarely know what type of reaction you will get when you speak to a client, so we brought together a few tips that could help you with that first call.
Preparation is key.You want to review the client account thoroughly before reaching out. Make sure to have the account history, any notes on the account, last invoice, and have them in front of you for reference.
Adopt the right attitude.Keep your interactions professional. You drafted a contract expecting payment after your services were rendered, it is not uncalled for to expect payment. Do not lose your temper by raising your voice or swearing, this will only make the situation worse.
Contact the right person.Avoid calling and getting redirected to “someone in accounting”. You want to identify the person who will be making payments and reach out to them. This can get rather tricky, as you might be stuck talking to the secretary for a while. A deadline might serve useful in this scenario.
Control the conversation.Keep the client focused on the debt, not on personal stories and excuses. It’s inevitable that the client will give you excuses as to why the debt is not being paid, but always bring the conversation back to the debt and repayment plan.
Remain flexible.Most people hate debt, so there might a good reason as to why they stopped making payments. Make sure to keep your payment options open and work with the client. A reasonable payment schedule benefits both parties.
Take detailed notes.While on the call, jot down as much as possible. You want to be able to look through the notes and have enough information to distinctively reiterate the conversation. Take note of contacts, times and dates, product usage, anything that could be used in litigation; the more detailed, the better.
If you have tried the above methods and haven’t had any luck, then you should think of contacting a debt collection agency with a proven track record of success.
As 2016 comes to an end, many businesses are looking forward to the start of a new fiscal year. A new year brings on different obstacles and growth opportunities, but chances are you don’t want one of those obstacles to be old uncollected debt. This is when a reputable debt collection agency comes in handy.
Statistics show that after the first month of uncollected debt, the chances of recovering debt decreased to 93%. Although that may seem adequate, the numbers take a sudden nosedive; after 3 months, there is a 73% chance of recovery, and after 6 months, there is a 50% chance you will not get paid. Needless to say, if you hit the one year mark of uncollected debt, the odds are stacked against your favor and you face a 75% chance of not receiving any payment.
Time truly is money when it comes to recovering payments, so you want to make sure you are addressing uncollected debt as soon as possible. However, collecting payments can be tricky. Some clients may avoid you like the plague! Others may become defensive and shut the conversation down. You also walk a fine line when dealing with long-term clients who are going through a tough time and do not have the ability to pay for rendered services; you do not want to lose a valuable client when collecting debt.
For situations that require a delicate approach, you will be more successful in recuperating payment when partnered with an experienced debt collection agency. Through our Customer Assistance Program, we are able to approach your invaluable clients with tactics that will retain your relationship and advance the debt collection process.
One issue that always comes up in the debt recovery process is getting a hold of a customer. What happens when you run into difficulties getting a delinquent client on the phone? It can be easy to rush to judgement when this happens and you can even start believing that the client is purposely avoiding a you.
Sometimes this is the case – and sometimes it’s not.
Most debt collectors know that you shouldn’t start the debt recovery process with this assumption. There can be many reasons for a late payment, so before concluding that the client is deliberately evading you, pause for a moment and consider these five ways to get through to them on the phone:
Consumer debt may indeed receive a lot of attention from the media, but business-to-business debt receives major amount of the debt recovery market. Of all the different regulatory bodies in the consumer collections market there is actually no de facto regulatory body overseeing the commercial debt collection recovery.
If you are in collection industry you probably heard about new proposed changes to debt collections law which would affect the way debt collection agencies do business. Consumer Financial Protection Bureau (CFPB) proposed these new regulations with the idea that it will give more protection for small businesses and individuals. Many other commercial debt collection agencies, as well as debt recovery firms, view these newly proposed rules as a hinderance to the way they currently pursue and collect debts from individuals. The precedent has been set for these proposed changes by an earlier recommendation from the CFPB in where they recommended changes to payday lending.
Sometimes negotiations do not work. All the phone calls, demand letters and reasoning will not get a debtor to pay. At times your customer has no intentions in resolving this debt that is rightfully owed to your company and all routine debt recovery practices have been utilized. Times like this takes thinking outside the box and it’s time to get someone in the field making you a priority.
When utilizing a Private Investigator (P.I.) to supplement your debt recovery efforts, timing is the key. It should not be only used as a last minute effort, Private Investigators are to be used to gather info to strengthen your case. It pays to use a P.I. that has experience in debt recovery and asset liability investigations.
When a P.I. goes out to visit a business, their main objective is to gather information to strengthen your debt recovery, not to harass the debtor company or staff. They can interview employees, take pictures of applicable assets and gather as much info as they can prior to being asked to leave. The gathered information can help reinforce your case and also usually results in a call back to the debt recovery agency from the debtor to revisit the case.
A private investigator can also be helpful for different investigative services. These include assisting with skip tracing, asset searches, asset liability investigations, business investigations and collections services. In general, a P.I. is a great tool to keep in your toolbox when you require extra strength and need to dedicate the due diligence to be successful with those difficult debt recovery cases.
When all your internal efforts have failed when dealing with past due receivables, it is time to seek representation from a professional. If you have proper accounts receivables policies and procedures you will most likely assign it to a collection agency first.
Most 3rd party collection agencies work on a contingency basis. You do not pay them until they collect. Their commision is based on a percentage of the dollar amount collected. This is beneficial since it avoids you having to spend good money in efforts of collecting bad money. A debt collection agency, when successful, will typically achieve results quicker, since there are no court dates involved. This also helps because the collection agency will make you a priority when the debt is still fresh in the debtors mind and there will often be less resistance given by the debtor.
A collection agency is structured and equipped to collect debt, not to file lawsuits as an attorney would be. They will have a set of tested and proven legal demand letters to send on your behalf. A collection agency will utilize tools and online services to skip trace, investigate and contact the debtor company.
An attorney can be a valuable asset in your collections process, but a lawyer should always be retained after your 3rd party collection agency exhausted their efforts. In the long run, your accounts would be in far superior shape and prepped for litigation once they are forwarded from your collection agency to your attorney. Remember, it’s a long walk up those courtroom steps, though sometimes a lawsuit is needed. Make sure your collection agency is your first line of defense when dealing with delinquent accounts. Alexander Miller & Associateshave over 60 years of combined industry experience. If you are dealing with delinquent invoices and need representation, contact us for a free consultation. If a lawsuit is necessary we can recommend a CLLA Attorney that will take the case. We look forward to earning your business!
In the past, accounts receivables were considered a basic function. Business owners have finally started to realize, that an effective accounts receivables process can have a measurable financial benefit to your bottom line.
Companies that deal with commercial accounts, generally deal with fewer customers with higher balances, while the consumer based companies deal with more clients with smaller balances in their accounts receivables department. However, the basic function in the AR process generally stay the same.
The Accounts Receivables Process
Remittance – Utilize multiple payment methods;
Credit Management– Make sure customers are familiar with your terms, use multiple sources for initial credit checks, call business references;
Collections – Be sure that any account past terms has been forwarded to a 3rd party collection agency or an attorney.
Early Pay Discounts
Sales discounts to encourage early payment can improve the cash flow of a business. This discount should be enough to encourage the customer to pay with the desired time, but small enough to avoid profit erosion. As with all promotions, early pay discounts should have a definitive end date as to when the promotion ends.
3rd Party Collection Agency
It is a good practice to have a definitive age when past due accounts are placed with a 3rd party collection agency. Generally it is recommended to turn over delinquent accounts after 90 days. At this point the debt is still fresh on your customer’s mind and will facilitate making you a priority. Along with have a psychological advantage, your collection agency will have tools, technology and contacts that can be used in order to have the account current quickly. Debt collection firms usually have programs in place to assist you in your internal receivables department. Other services include, demand letters, private investigators, commercial credit reports and access to legal records and information.
Maintaining an effective accounts receivables department can be a challenge. Implementing proper policies and procedures is the most important factor, but is often overlooked by many small to medium size businesses. Everything from your credit application to the length of terms will affect the numbers on your aging report. Working with a collections agency that will provide you commercial credit reports really help you know your client plus help you make an informed decision when extending terms to new customers which limits your risk. Continue reading “Event Sensitive Vs. Time Sensitive Accounts Receivables”
When a balance goes unpaid, a business can usually send out past due invoices and make efforts to collect what is owed. However, these steps eventually hit a limit of what is available and what is reasonable. For professionals in the accounts receivable management industry, there is an unparalleled level of efficiency and tools available that are highly effective in yielding results.