Are you running a business and having challenges recovering debts from your customers? Or do you have some clients who are reluctant to pay your invoices? It is a known fact that the longer your accounts remain delinquent, the less likely you are to recover the debt. In situations like these, the chances of recovering a debt significantly decreases as time passes. When faced with challenges such as this, you may find yourself asking, “when should I really consider hiring a debt collection agency?”
When Should You Consider Hiring Debt Collection Agency?
Hiring a debt collection agency can enable you to recover debts that are past due. Frankly speaking, dealing with delinquent accounts can really be costly, frustrating, and time-consuming. This is a major reason why most business owners often resort to hiring a debt collection agency who are professionals at collecting all types of delinquent debts, such as business debt, credit card debt, student loan debt, medical debt, automobile loan debt, personal loan debt, and even unpaid utility and cellphone bills.
So, back to the question, “when should you resort to hiring a debt collection agency to help you recover outstanding debts?” To help you answer this question, consider the following as red flags or indicators that hiring a debt collection agency should be next on your plan.
● Ghost customers:
This is when your customer seems to have simply disappeared and just continues to ignore your phone calls, emails, or invoices. You should especially be concerned when a customer does not respond to your second attempt to collect your outstanding balance.
● Bad faith:
This is when you’ve agreed to a payment plan, but the customer does not follow through. Customers who neglect to pay even after you've agreed to meet them halfway with a payment plan are unlikely to pay without employing a debt collection agency.
Also, you may be concerned when it comes to customers with a history of financial irresponsibility, or those who have sent in a bounced check or multiple bounced checks.
Furthermore, you might have customers who make flimsy complaints about your business, product, or service, and use these as excuse not to pay. Most of the time, these complaints are just excuses to get out of paying their outstanding debts.
Be cautious when you hear the line “let me call you back tomorrow,” “I will call you by the end of the week,” etc.
● Denial: Sometimes, you might encounter customers who completely deny responsibility for the money they owe you. Usually, this is the worst case, and unless you hire the service of a collection agency, debts owed by this kind of debtors are rarely recovered.
● No payment history:
This is when a customer does not have a positive payment history with your business. There is always a higher risk to extend credit to new customers, and there is obviously a higher chance that they will refuse to pay up their outstanding debts.
● Medical accounts:
There is a greater chance for medical providers not to be paid when a client’s co-insurance is not being paid upfront. The risk of not being paid also increases when medical insurance pays your client directly. There are some clients who will intentionally or unintentionally just take the money for themselves, which means you may never receive your payment without resorting to a debt collection agency.
Usually, companies send past-due accounts to a debt collection agency when they are between 60 and 120 days past due. While there are many other factors to consider when deciding if it's time to hire a debt collection agency or not, the indicators above will help you know when it may be time to contact an agency.
Don’t forget that the longer you delay before sending a claim to collections, the less probable it becomes that the collection agency will be able to successfully help you recover the debt. Accordingly, don’t waste time!
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