Making an effort to collect on past due accounts is just a way of life when you’re in business. Generally, many business owners elect to participate in first party collections. This means that before they hire a third party company or sell the debt to a debt buyer, they first attempt their own collections. It rarely works out the way that they plan. Here are 4 reasons why your collection efforts never work out the way that you plan.
You Don’t Have the Right Information
Regardless of your industry, it is imperative that you take the time to keep your client information updated. This means asking for updates for phone numbers, email addresses, mailing addresses, and any other pertinent information. In addition to a business number, ask for a cell phone number. Having the right information on file for your clients will make the collections process easier. In fact, a proposed change to debt collection laws includes verifying the right information in order to contact the right debtor.
You Don’t Have a Plan
How and when you will start collections should be a written part of your policies and procedures. This helps with consistency and ensuring that all past due account owners are treated in a fair manner. This plan should actually start from the very beginning of your relationship with the client. It can include things such as how your company plans to remind clients if their bill is past due. In addition to having a plan, you should also take the time to review the file and also know what you’re going to say if you manage to get into contact with the client about their past due account.
You Don’t Understand Collections Law
If you get contacted by an attorney, the FTC, or even if the client tells you to stop calling and you keep calling, you could find yourself in some very deep legal troubles. It is imperative that you understand the Fair Debt Collections Practices Act. It tells you what you can and can’t do when you are working to collect on past due accounts.
Another important piece of collections law is to make sure that you understand how long you have to collect on a past due account. Each state has laws that determine how long you have to collect on certain types of accounts. So, make sure that you know which type of account (open accounts, revolving accounts, etc.) you have with your client and that you understand how long you have to collect on it.
Make sure that you have copies made of invoices (both paid and unpaid), ledgers that record payments and dates, and a signed contract of some type. This documentation is incredibly helpful if you must collect because it can be used to verify the debt if asked to do so by the debtor.
You Don’t Have Time
Time is one of the most precious resources that you have in your business. You simply may not have the time to monitor and collect on past due accounts. Clients ARM can help. We have more than 30 years of experience. We can assist you with first party or third party collections. First party collections are ideal for businesses who also want to work to maintain the client relationship or their reputation. Clients ARM strives to represent you as a friendly provider who offers solutions to help. We do this by relying on old fashioned customer service principles. If you’d like to learn more about how Clients ARM can help you with your first or third party collection needs, call us at 206-596-3000 to schedule your free, no-obligation review. It’s fast. It’s easy. It’s less expensive than hiring a traditional employee. Call today. You’ll be glad that you did!
