When Do You Need A Collection Agency?

Business owners are often faced with the enormous task of settling accounts and collecting on late payment or nonpayment. In times of economic struggle, this can be the most difficult part of running a business, but a necessary part if that business is to be a success.

 

Deciding whether or not to place your accounts with a collection agency is a likewise daunting task.  However, many analysts agree that financial problems show themselves in patterns, and there are particular signs you can look for to determine whether or not the timing is right to place an account with a collection agency.

1)      If a customer is fairly new, has had an account with your company for less than a year, and fails to respond to any invoices or statements that you send out, that customer should be sent to a collections agency as soon as possible.

 

2)      Your payment terms don’t work, regardless of how fair they are. If you offer reasonable payment terms (even for someone facing economic hardship) but your offers still fail to meet the customer’s ability to pay, then that customer might be playing games and might be determined to simply not pay.  If so, you should get rid of that account as soon as possible by handing it over to a collections agency.

 

3)      The customer starts denying responsibility for the debt.  When a customer begins denying that he or she is responsible for the debt, it is time to hand the account over to a professional. Without professional debt collection help in cases like these, the collection will be too time consuming and costly for your business to handle.

 

4)      The customer is getting separated, divorced, or has marital difficulties.  Debt problems almost always follow marital problems.  If you are aware that a customer has marital problems, it is best to send that account to a professional that will be able to handle the address changes, phone number changes, and financial instability that will likely follow for that account.