In order to keep the lights on, any business – whether commercial, medical or otherwise – needs to protect its cash flow. That becomes a real problem when payments are past due or delinquent. While some businesses deal with these difficult debts themselves, opting to send a few stern emails and voice messages, this isn’t usually the most effective plan of attack.
No, sometimes you need to bring in the professionals; sometimes, the benefits of working with the pros far outshine the benefits of doing it yourself. For those times, you need to bring in a collection agency. But knowing how to choose the right one, when to make the call and how to proceed in the process, can be difficult.
To help you along the way, here are a few do’s and don’ts of using a collection agency.
Do: Choose a Trustworthy, Diplomatic Agency
You want to recover your debts, and receive the payments owed to you, but you also want to keep the debtor as a customer or client. In order to walk that fine tightrope, you will have to seek out an agency forthright about its dedication to diplomacy, one that complies with regulatory agencies.
Don’t: Choose an Agency That Uses Intimidation
Robocalls, pestering, intimidation – these tactics are not only ineffective, but they will sour your client relationships very quickly. Read a few reviews before you choose an agency, and skim their website copy. Often an upstanding collection agency will volunteer their Better Business Bureau Rating.
Do: Contact an Agency as Soon as You Are Suspicious
It can be tempting, as a non-confrontational business owner, to sit on your hands and assume that a late payment is on the way. But the sooner you hand a case over to a professional collection agency, the better luck they will have in recovering the debt.
Don’t: Write Off Old Debts as Unrecoverable
That said, if you do have delinquent debts – usually debts overdue 180 days or more – don’t simply discard them. A great collection agency might still be able to recover something with an old debt. And as long as there is no upfront fee (see below), you might as well give it a shot.
Do: Demand Transparency
You want a collection agency that readily offers up progress reports, and is always available for contact. Evasive agencies, agencies that keep you in the dark about the status of your case, shouldn’t be trusted.
Don’t: Get Suckered Into Upfront Fees and Unfair Terms
Here’s the thing: you shouldn’t have to throw perfectly good money in the hopes of recovering a debt. Upfront fees essentially require you to do this; they require you to gamble. Find a collection agency that takes a percentage of the recovery if, and only if, they are successful. And don’t let an agency rope you into unfair terms, like a minimum monthly number of accounts.
When it comes time to call in the pros, make sure you are hiring the right ones, at the right time and under the right terms. That way, you get back as much of the money you are owed, with as little damage to client relationships.
