Every introduction to sales tactics will teach you that your pitch won’t win over customers without a hook that makes the service stand out from the pack. Here’s one you may have heard in your quest to find a collection agency: How they can get you paid more quickly.
Speed is not much of a boast. Why? This may surprise you, but you’re already deeply familiar with the answer. When the bill arrives, some customers pay quickly, while others hold off. This is true at both the initial billing stage as well as the collection stage.
So if you hear a lot about speed, make sure they’re not focusing on round one — that first wave of customers that responds when the initial round of letters and calls go out. In this business, these are the accounts that are most profitable. Beware of agencies that focus their efforts on easy wins. What makes a collection agency worthwhile for you in the long run is one that has a plan to resolve difficult accounts. This guide will walk you through the two tiers of collection.
Tier 1: Quick recovery
When a batch of accounts move to collections, you can expect to see a healthy percentage of recovery in the first report. It’s not uncommon to reap results from that first round of calls and letters, because hearing from a collection agency is often a powerful and effective method to convince people to take action.
What can increase this recovery rate even more is working with a collection partner that will consult with you on drafting a final demand letter, using effective wording that gives you that opportunity to recover accounts before they reach the collection stage.
Tier 2: Focused efforts
While customers who fail to respond at this early stage are more difficult to collect from, there are still opportunities to get some of these accounts to resolution. You may not see that same big wave of success from the first round, but you’ll still capture more accounts receivable.
Credit reporting: Clients who opt for this service give their late-paying customers an extra incentive to address payment on the account. If the account is reported, that can affect their credit score for the next seven years.
Additional calls and letters: When choosing a collection agency, it’s important to ask about when and how often they continue to attempt to reach these customers with follow-up calls and letters.
Skip tracing: Whether customers fail to pick up the phone or the bill returns in the mail, skip tracing is one way to locate new and updated contact information and reconnect with lost customers.
Credit monitoring: This helps a collection agency identify when a customer has gained an ability to pay — that’s a golden opportunity to resume contact and recover payment.
It’s worthwhile to ask your prospective collection agency to tell you about their resources and how they use them.
Understanding the limits of collections
Many things can affect the speed and outcome of recovering accounts receivable. As you know, good customer information gives you a much better chance of recovery. Other things that limit debt recovery include: older debts, highly disputed accounts, and account with inaccurate contact information. Finally, some industries see a higher success rate than others.
Choose a partner that provides focused, reliable collection efforts, and you’ll see the difference in your accounts receivable. IC System is celebrating 80 years of delivering reliable, ethical debt collection solutions.
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