Delinquent Accounts? The 5 Types of Clients You Should Send to a Debt Collection Agency
Money paid into your company through invoices are its life blood. Do you have customers that have not paid their invoices? Are the bills piling up and do your clients make excuses or tell you that the money is on the way? Unpaid invoices take away the cash flow of your company. Without it, you can't pay your employees or yourself. You can't put the money back into your business. When you've had enough, it's time to hire a collection agency to collect what you are owed.
A debt collection agency focuses on getting your money to you in a matter of months. They may call, email, or send mail to your delinquent client to get in touch with them. They may even seek legal help to get your company the money.
As you read through the five client types, keep this in mind: remember to consider whether you want someone who performs first party or third party collections. Also make sure that the collections agency is properly licensed and isn’t involved in any legal battles regarding their collections practices. Clients ARM has a collections rate of better than 90%.
Use Collections for Clients Who Don’t Follow Through on a Payment Plan
If a client doesn't follow through on a payment plan that you have set up, it's time to hire a collections agency. You may have adjusted the debt to a lower amount or allowed them to make low monthly payments over a matter of months. Either way, when it's time to pay and a client refuses, it's time to hire a debt collection agency.
Use Collections if the Client Stops Responding to You
If clients don't respond to your attempts to reach them by phone, email, or mail, it's time to hire a debt collection agency. The time you take out trying to reach them takes the time you could be performing services for others. It robs you when you continually must try to get in contact with them.
Use Collections if a Client Denies Responsibility or Refuses to Pay
One of your clients tells you that he won't pay for your services because his ex-business partner hired you for their business and not him. If a client refuses to pay because they do not think the debt is theirs to take responsibility of, it's time to call a debt collection agency. Without one, the debt may never be recovered. It is also important for you to provide verification of the debt owed if it is requested by the debtor.
Use Collections if the Client Uses Personal Situations as a Reason to Not Pay
Divorces, deaths, and crisis do happen. However, even after a few days or even weeks in the most extreme situations, bills must still be paid. If a client refuses to pay due to personal reasons for an unreasonable amount of time, it's time to hire a debt collection agency.
Use Collections if a Client Refuses to Pay Because They’re Unhappy with Your Services
Before you refer anyone to collections, it is important that you assess the situation. Are they truly unhappy or is it an excuse to get out of paying their bill? If you believe it is a legitimate complaint, you may also consider working through the problem with the client. However, if they appeared happy and didn’t have an issue until the bill arrived, your efforts to get paid may fail and you may need to hire an outside debt collector.
You should seek outside help after 120 days. If you client hasn't attempted to pay for 120 days (four months), it's time to hire a debt collection agency. Don't wait longer than this. You're less likely to collect on the debt if you do.
If you need a debt collection agency for a client who just won't pay, check out Clients ARM. Clients ARM works as a 3rd party agent through their licensed and bonded agency when it is necessary to involve the law. We have over 30 years of experience and are ready to collect your precious revenue. What are you waiting for? Contact Clients ARM today!