Entrepreneurs of any size might be reluctant to turn to an accounts receivable partner for a host of reasons. Here are three myths about working with a third-party debt partner and how working with a reputable agency can boost your profits.
1. Debt collectors are only for extremely late bills.
As your receivables age, the likelihood of recovering payment diminishes, which of course shrinks your profits. A good collection partner can help you proactively recover your aging receivables even before it’s time to hand them over to collections, between 60 and 90 days past-due. For these early delinquency accounts, IC System offers address verification services so you can uncover errors and address changes and resume communication with customers and clients. We can also write and mail final notices to your customers and clients, which has proven highly effective to recover outstanding balances.
2. They’ll create a negative experience for my customers.
No one likes getting the notice in the mail. Even if they owe the money, that alone can set off strong emotions of embarrassment, anxiety, and anger. That is why a good collection partner understands that and treats your customers with dignity to preserve the customer relationship.
For more than 40 years, federal law has required collection agencies to follow specific rules when it comes to contacting customers. Middle of the night phone calls, threats of jail and humiliation are just some of the tactics that are downright illegal. Debt collectors are also required to cease contact at the debtor’s request. Even so, a business owner who puts their customers first might have concerns and that’s understandable. In March, the Federal Trade Commission released its report on consumer complaints in 2016. Debt collections was again at the top of the list with 859,090 complaints filed.
Here’s something to put those concerns into perspective. Third-party debt collectors make more than 1 billion customer contacts a year, according to a 2015 report, so very few customers end up taking the step of registering a complaint. Fortunately, IC System was founded in 1937 with a drive toward ethics and integrity in our collection services. Maintaining regulatory compliance and staying ahead of the curve remains a top priority.
3. Debt collectors are too expensive.
Admittedly, some agencies are priced to attract larger clients. But small businesses are just as entitled to receive payment for their services or products. That’s why IC System offers several tiers of service. That means a small business with just a few accounts receivable on the books will find an affordable option.
Want to learn more? Explore your options so you can take the next steps to resolving your accounts receivable.
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About the Author: Brian Eggert
Brian Eggert is a business development specialist and writer for IC System, one of the largest receivables management companies in the United States. With 18 years in the collection industry, Brian's experience includes operations, client service, proposal writing, blogging, content creation, and web development.