It’s a fact of business life – not all clients pay on time and some clients don’t want to pay at all. The older an overdue account is, the chances are far less likely that the account will become current on payments. Businesses are encouraged to consider working with a collection agency to assist in getting the money they are owed.
Collecting on bad debts is a time consuming process that can take away valuable resources from the average business. Some companies will hire a credit manager to try and work through the unpaid accounts, but a growing business soon has to consider a full time team to handle all the accounts, which means paying out salaries and benefits just to collect on overdue accounts. Sometimes, the investment in extra staff doesn’t pay for itself.
The benefit of hiring a collection agency is that they are professionals at what they do. They have the tools at their disposal to track down old debtors and the personal expertise in setting up arrangements that can influence a bad debt to become current. Collection agency workers also have extensive knowledge in state-by-state compliance laws, something that most in-house collections personnel are at risk of violating.
As a general rule, when an account gets past 90 days of its due date it’s time to hand it over to an agency. Most companies are not likely to have the extensive knowledge, tools or expertise to get an account this late to pay up. But there are other signs to go by that will help companies know when they should start consulting with a collection agency. Some clients will continually make complaints that are not justifiable. This type of client is likely trying to get out of paying for the product/service and should instantly be referred to a collection agency.
Repeat delinquencies are also another red flag that the client should be shuffled to collections. Some clients will flat out deny that they are responsible for the payment – a sign for collections. In nearly half of all collections cases the client simply doesn’t follow the terms of the payment agreement. This client generally pays, but only on their terms and when they want. By acting quickly and hiring a collection agency, companies are able to keep their losses to a minimum.
Companies are urged to research their collection agencies and narrow the list to only those that have industry-leading insights. Companies like Omega-RMS fit this description.