How much time do you spend calling or sending letters to your past-due consumers? Chances are, it’s too much time. Or maybe it’s not enough. One of the main reasons that many small businesses fail is because of poor business planning. An effective business plan should include a detailed accounting of your cash flow and how you’re spending your time. That means an economic solution for dealing with overdue consumers.
Here are some signals that will help determine if your business needs debt collection services:
Your consumers aren’t following through with payment.
Have your consumers broken their agreement, defaulted on a payment plan, or failed to respond to your attempts at contact? In these cases, a letter or call from a collection agency can help get them back on track. The right collection partner will have a consumer-friendly approach to ensure you maintain your customer base.
You’re unsure about your plan for dealing with past-due accounts.
Verify that you have a set schedule for calling or sending letters to your past-due consumers. If you don’t, you could have a cash flow problem that puts your operation at risk.
After you make your initial collection calls, don’t hold onto your accounts receivable inventory. Send it to your collection partner. The sooner, the better.
Most businesses recover more when they submit accounts to their agency after 60 – 120 days of delinquency. Waiting longer than 120 days, however, dramatically reduces the likelihood of recovering your accounts.
You aren’t trained to deal with past-due consumers.
Every business should be sending a letter or two, and even making a call to their past-due consumers before sending them to a collection agency.
However, once an account becomes seriously delinquent, recovery takes some finesse. Talking about a debt with a consumer can quickly go south if you’re not prepared to de-escalate conflict, probe for financial information, and handle payment negotiation. The right collection partner will have a rigorous training program that uses diplomatic techniques to maximize recoveries on your behalf.
Have questions about IC System’s debt recovery solution for small businesses? Learn more.
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.