The Two Main Reasons Most First Party Collections Efforts Fail
Past due accounts. Every business will eventually have at least one. When you have more than one, you have a bigger problem. You’re not getting the money that you need for the services that you’ve provided. So, you decide to collect on the accounts. When you hire someone to do it on your behalf that is known as a first party collection. That means that you’ve either hired an employee or contracted with a company to collect on it. This is not the same thing as selling the debt to a third part debt collector or placing it with a collections agency. It means that you want someone to act as an extension of you to collect on the debt. There are two main reasons that most first party collections efforts fail if you leave your collections in-house. In this article, we will discuss those reasons and what you can do about it.
First Party Collections Creates Friction
Have you ever personally called someone about their delinquent account and then they came in for a follow up appointment of some sort and you saw them? Talk about awkward. You were both probably incredibly uncomfortable. Most likely, they didn’t set out with the intentions of not paying. Life happens. Do you want to feel the tension in the room between you? Probably not. It can make for a bad experience for both of you.
First party collections can also create problems for any employee that you ask to do the collecting on your behalf. It’s hard for people who do not have experience in collections to do the job. They may feel like their being mean. Even worse, they may do something that is against the law.
First Party Collections Can Be Expensive
If you’re in business, you may or may not have other people that are part of your team. So, if you’re faced with collecting on delinquent accounts then you are thinking about bringing someone in as an employee to do it for you. That, of course, takes time for training, overhead for equipment and space, and salary and benefits. That can be expensive for a venture that you hope will result in you getting the money that you’re owed. It’s like the old saying: spending money to make some money (despite the fact that you already did the work to be paid).
That’s an added expense that not every business can absorb. If you can’t afford to bring someone on, you might decide to do the collections on your own. In addition to causing friction, you’ll also lose money. That’s time that you could be doing business.
First Party Collections Made Cost Effective
If you could handle your first party collections in a way that minimized stress and saved you money when compared to hiring an employee, would you do it? Of course you would. The good news is that you can solve both of the main reasons most first party collections efforts fail by partnering with Clients A.R.M.
Clients A.R.M. provides first party collections. That means that we collect on your past due accounts as an extension of your business. Oh, and often we are 40% less expensive than hiring an employee. We are also highly experienced. Each of Client A.R.M.’s account managers have a minimum of 15 years of experience. We focus on collections while you focus on your business. Are you ready to find out more? Contact Clients A.R.M. now to schedule your free consultation. We will review your processes and answer your questions. Clients A.R.M. will design a solution to help minimize future delinquent accounts while collecting the money that you’re owed. Don’t wait – take the first step by booking your free review.