As any business owner knows, no matter how well you analyze the credit reliability of potential customers, a time will come when some of them stop paying their bills. When this happens, businesses are left with a few options: they can simply cut their losses and cease future business with that customer, they can attempt to collect the debt themselves (depending on the size of the company, this may involve the owner calling delinquent customers or a credit department making collection-type calls), or they can choose to hire a collection agency. It is difficult to know when it’s time to turn accounts over to collections, but here are some tips to help you decide.
- If a customer seems to have simply disappeared off the face of the planet, hiring a debt collection agency is a must. Debt collectors are well-trained in tracking down non-paying clients, and have powerful tools available to them to help find people when you’ve lost track of them.
- Another good indicator that it’s time to hire a collection agency is if the debt is over 90 days past-due. While at this point, even debt collection has a lower chance of success, it is very difficult for business owners or in-house collectors to successfully collect on past-due bills after 90 days. A debt collection agency will have a much higher chance of successfully collecting on the debt than you will.
- Customers that have sent in a check or multiple checks that bounced may also warrant a call from a debt collector. Repeatedly sending checks that bounce is a strong indicator that the customer has no intention of paying, and debt collectors know when and where to apply pressure to get them to pay.
- If you hear the line “Let me call you back after lunch,” or something similar every time you get the debtor on the phone, this is another good indicator that they do not intend to pay you back. When the debtor never calls back, it should be taken as a clear indication that they are avoiding communication with you and will do whatever it takes to stall your efforts to obtain a payment.
- Debt collection might be needed if a customer repeatedly breaks promises to pay off their unpaid balance. This is another classic stalling tactic; by making promises to pay, the customer assumes they won’t hear from you until the promised deadline for payment has passed. This is just one of many ways they stall your efforts to collect on the debt; as an unpaid bill becomes older, it becomes increasingly difficult to collect on.
While in the end, the decision to contract a debt collection agency is up to the business owner, we hope that these tips will help make the decision a bit easier. Once the decision’s been made to hire a collection agency, business owners should sit down and really research the agencies available to them to find the one that will best fit their needs.
