The Kaplan Group’s 3rd Annual $1,000 Scholarship Awarded
We are excited to announce that The Kaplan Group’s 3rd Annual $1,000 Scholarship has been awarded to Audriana Rodriguez, a senior at Florida International University!
Three years ago, The Kaplan Group, a commercial collection agency, created the annual scholarship hoping to encourage young students of today to consider pursuit of a career in the credit industry. Our industry offers interesting careers requiring excellent communication and analytical skills as well as the ability to think creatively and oftentimes “out of the box.” We hope that our annual scholarship competition will expose students to our industry and they will consider jobs in the credit industry, particularly in commercial debt collections, upon graduation.
The Kaplan Group has a long history of involvement in supporting youth organizations and providing free educational opportunities within our industry through published articles, ebooks and seminars. The annual scholarship is another example of our continuing efforts to give back to our industry and our community.
Students from accredited 2 year or 4 year colleges or universities, including graduate programs were invited to participate in the scholarship competition so long as their majors or concentrations were in business administration, economics, entrepreneurship, management, law, accounting, finance or MBA curriculums.
Ms. Rodriguez was thrilled to receive the scholarship and said, “I am so grateful and happy that I took advantage of this opportunity. I really didn’t expect to win, but knowing that I am the first woman to win the scholarship makes it even more meaningful to me. Thank you so much!”
Audriana’s winning essay is reprinted below and was in response to the following prompt:
“Customers are the lifeblood of every business. We work day after day to find, attract, and retain our customers. But what happens when the customer does not pay and you get stiffed with the bill? As a B2B collection agency, The Kaplan Group sees these situations daily. Unfortunately, the alternative of going to court needs to be considered in many of the claims placed with our collection agency. Often times these neglected invoices can be collected without relying on the legal process, but unfortunately some of our clients eventually face the decision of whether or not to sue a customer that is long past due on payments.
To address this type of situation, we created a flowchart that answers the question: “Should you sue your customer?”
Please review the flowchart and write 600 words telling us each of the following:
• One situation where you SHOULD sue your customer.
• One situation where you SHOULD NOT sue your customer.
In each scenario, explain what major factors you considered when determining whether or not to pursue a lawsuit. Be creative – simply repeating what is in the flowchart will not result in a winning essay.”
Audriana Rodriguez’s Winning Essay:
The decision to sue a customer can be very similar to flipping a house- sometimes you profit, and sometimes you don’t. Because there is no guarantee that a profit will be made, many different aspects must be considered; the most important consideration is the potential return on investment (ROI). If debt collection litigators detect a sign that the customer may not be able to pay, then they most likely will not proceed with the case. However, if the return on the investment looks positive, this gives them the “thumbs up” to continue with the process of suing the customer.
Renovating for profit, or house flipping, occurs when someone buys property and renovates it in order to sell it at a higher price to make a profit. On the HGTV show Flip or Flop, real estate agents Christina and Tarek purchase fore-closed homes for relatively inexpensive prices and then remodel them to sell for a higher price. Many times the process runs smoothly and they are able to make a good profit, but other times they do not profit or even lose money. Why? Their return on investment is not what they expected or anticipated.
The process can be very risky, just like suing a customer for unpaid invoices. In both situations, there is no guarantee of profit, and the processes can be very demanding regarding both time and energy. That is why before anyone decides to sue a customer or flip a house, they must consider the potential return on investment.
When someone is interested in purchasing property to flip, they begin the process by inspecting the area to make sure they know what they are getting themselves into; debt collection litigators do the very same. They analyze the situation to see if it is worth the risk to sue the customer. Realtors visit the property to see what potential it may have and to estimate how much money they would need to renovate it. If, for example, they come across a house that appears to be heavily dilapidated and mold growing on the ceilings, the realtor may not want to invest in the property. His potential ROI might not be that high, given all the money and time he must put into the house in order to refurbish and sell it. The same scenario can be applied to debt collection litigation: if a company discovers that their customer has financial problems (moldy ceilings) that could hinder their chances of collecting, they should not sue the customer (not invest) because the potential ROI will not look good. Costs will exceed the recovery, if there is any.
On the other hand lies a situation where the realtor walks into the property and visualizes great potential for the house; he is content with the location, likes the foundation, and thinks he can successfully renovate it with minimal effort. His possible ROI looks very promising in a case like this, and he would most probably continue on to the next step of flipping a home. When debt collection litigators are able to find a circumstance like this, they too should proceed with suing the customer; they see a legitimate conflict (good foundation), and little to no financial issues plaguing the customer (no disrepair). This shows the debt collection litigators that a good ROI seems favorable through litigation.
Overall, the decision to sue a customer can be very risky because while lawyers can many times estimate the success of winning the case, there is no absolute assurance of collecting the money. Because of this, a process must be taken to calculate the potential return on investment (ROI) from suing the customer. If the costs look like they will exceed the expected value of recovery, then litigation should not be undertaken; however, if the ROI estimate seems assuring, suing a customer may be the appropriate means to collect outstanding bills.
About The Author:
Dean Kaplan is Principal at The Kaplan Group. Dean's expertise is widely recognized in the debt collection industry. His advice has been published in a number of industry newsletters such as Credit Today and InsideARM and he is a frequent speaker at industry events.