You have a sales customer who hasn’t paid. It’s been 30, 60 and now 90 days. The letters didn't work and the phone calls went unreturned. Now it’s time to call in the professionals.
The trouble is, the world of commercial collection agencies seems, well, unseemly. Plus you don’t truly understand how the commercial collection process works, let alone if it’s the right approach for your company. After all, you don’t want to alienate a long-standing customer, impacting future sales in the future.
To help you gather the facts and make an informed choice, here are answers to some of the questions you might have about commercial collections:
Why should I outsource collections?
In a perfect world, you wouldn’t need a collections agency. In the real world, if you want to get paid 100% of the time, then sometimes you need to call one in. And when you do, they can save you time in the collections process, while also drastically increasing the odds you’ll get paid.
This is especially true for more difficult accounts, aging accounts or the uncooperative debtor. In the meantime, you can focus on managing, training and expanding your sales team.
When is it time to call in a commercial collections agency?
An agency can be far more effective when they’re called in right away. When they're more effective, you're more likely to get your money.
So as soon as you start seeing red flags, you need to take action. Don’t write another letter or make another phone call, then wait a month. It’s better to write off the cost of a B2B debt collection agency than 100% of the debt you were never able to collect.
Can’t I just have my attorney take a delinquent customer to court?
An attorney can get judgments passed forcing a slow-paying client into court. At the end of the day, though, they’re not in the business of collecting debt.
A commercial collections agency, on the other hand, will understand the psychology behind customers who are behind and how to motivate them to pay their bill. They also know how to find pertinent information – via private investigators and asset and liability investigations – that can then be leveraged to facilitate payment.
Won’t hiring a collections agency alienate long-standing customers?
Collecting money from customers can be a delicate situation. Especially when a loyal, long-term client's payment becomes late. You want to get paid – but you don’t want to ruin a relationship with a long-standing and lucrative customer. This requires the perfect approach.
Reputable commercial collections agencies understand this. They can often work with you to develop a collection process that meets your needs, taking a more diplomatic approach than an aggressive stance.
How does the process of commercial collections work?
Here’s a basic overview:
Research. This includes researching the debtor and their financial situation, including assets and liabilities, pending and ongoing lawsuits, judgments and tax liens.
Collection. A variety of debt collection strategies may be used, including sending a final demand letter, various phone tactics leveraging information collected in the research stage, and making a personal visit to the debtor’s location.
Litigation. If the customer still doesn’t pay, additional tools can be leveraged, including credit reporting and legal intervention.
What should I look for when choosing a commercial collections agency?
Look for agencies that are bonded and licensed; members of the Commercial Law League of America, the International Association of Commercial Collectors, and the Commercial Collection Agencies of America; and accredited by the Better Business Bureau.
In addition, the collection agency you ultimately choose should have a proven track record of superior customer service, success and integrity. They should be able to back this up through client references and case studies.