When To Hire A Debt Collection Agency
Dealing with past-due accounts can be costly, frustrating and time-consuming. This is one of the main reasons why most business owners will partner with a debt collection agency.
Listed below are some red flags that indicate employing a debt collection agency should be your next priority.
15 Clear Signs You May Need To Hire A Debt Collection Agency To Help Your Business
It is important to hire a debt collector when your client disappears and ceases to respond to your phone calls, emails, or invoices. You will also likely need the assistance of a collection agency if you can't find your debtor, for instance if the address or number you have on file isn't valid anymore.
Your customer does not follow through with a payment plan you agreed to. Customers who neglect to pay even after you've decided to meet them halfway with a payment plan are unlikely to pay without employing a debt collection agency.
Customers with a history of financial irresponsibility or who have sent in a bounced check or multiple bounced checks should be of concern to you.
You might have customers who make baseless complaints about your business, product or service and use these as excuses not to pay. Unfortunately, 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.
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
There is always a higher risk of extending credit to new customers, and there is a higher chance that they will refuse to pay their outstanding debts.
There is a greater chance of medical providers not being paid when a client's co-insurance is not being paid upfront.
When a medical insurance company pays your client directly, your risk will substantially increase; some clients will simply take the money themselves. Unfortunately, you may never receive your payment without resorting to a debt collection agency.
You should consider hiring a debt collection agency if any of the following apply to your business.
Lack of personnel
There is no one assigned to handle delinquent accounts.
The volume of delinquent receivables is beyond the capacity of your accounts receivables staff.
The cost of handling receivables in-house is higher than hiring a collection agency.
If you have low balances receivables but a high volume of them, it might not be worth your staff's time to handle them.
Lack of knowledge
You do not know how to deal with debtors, especially if they are challenging to deal with.
Avoid the stress
You do not have the means and want to avoid the stress and headache of dealing with uncooperative and unreasonable debtors.
Debt past 60 days
A 60-day-old debt probably requires a collection agency.
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