Hi,
When faced with the scenario of calling a bill collector about a past due bill that you can't afford to pay in the foreseeable future, there are several things to consider to successfully negotiate an acceptable solution. Before making the call, it is important to realize that the bill collector would love nothing more than to resolve your account in one telephone call. Some thoughts to consider:
1) Ask the bill collector for his or her name and write it down.
2) Disclose your financial situation to the bill collector in an honest and factual way. Do not sensationalize or editorialize any part of it. Chances are that the bill collector has already pulled a credit report and is aware of your payment history and outstanding debt structure.
3) If full payment is not available for the particular bill, there are two alternatives: The first is to offer a lump sum reduced amount to settle the bill.
The second is to offer payment arrangements over a long period of time. Collection agencies are not in the business of making long term commitments, so many times they would rather the lump sum settlement. If the offer is reasonable, chances are that it will be accepted.
4) If a lump sum payment is not available and you wish to propose payments, make sure that your proposed payment schedule is one you can keep.
5) If you have no financial resources available to pay your bill, explain that to the bill collector and explain that you are investigating alternatives. Tell the collector that when your situation changes you will immediately inform him or her. But, until then, there is nothing you can do.
Remember that bill collectors deal with all types of people, including professional deadbeats. They have heard every story and stalling tactic in the book. These are suggested ways to negotiate in good faith with a bill collector. Stalling or manipulating a bill collector could result in making your financial situation much worse for you, not better. Tomorrow I'm going to write about negotiating with a customer service representative.
Until then,
Alan
Showing posts with label collection agencies. Show all posts
Showing posts with label collection agencies. Show all posts
Wednesday, May 9, 2007
Monday, April 30, 2007
Setting Up Collection Systems For A Small Business
Hi,
Every small business needs a well planned system to actively monitor accounts receivable. For a system to be successfully implemented, consider the following:
1) Do most customers get paid on a regular basis for their goods and services, or are they contractual businesses who get paid on an irregular basis? It is a good idea to split these customers into categories according to criteria.
2) For regular paying customers, a collection system needs to be in place consisting of three phone calls and three letters. The first phone call is informative notifying the customer of the past due amount and obtaining a date for payment. The second phone call is made three days after the promised due date and references the first call and promised due date and the fact that payment has not been received. The customer is told that payment is due immediately, setting the date. The third phone call is to say that if payment in full is not received within forty eight hours, all action necessary to collect on the account will be taken. This may include obtaining the services of a collection agency and/or attorney. Each of the phone calls should be formalized in letter form and mailed out immediately following the call.
3) For irregular paying customers, it is necessary to follow the same collection system, only the original payment date is established at the time of purchase. In the case of some contract labor, it might be necessary to extend payment dates, as the customer might not have received expected payment for a completed contract. If this scenario unfolds, require the customer to give constant updates, as on numerous occasions, the customer might be over extended and the amount due to the customer might not cover expenses.
To collect an NSF check:
1) Call the customer to tell him or her that payment is required immediately for the check.
2) Either call or take the check to the bank the customer drew the check on to see if the check will clear. The NSF check may be presented to the customer's bank for payment after it has been returned by your bank.
3) If no payment is received within 48 hours, contact the customer to tell him or her that whatever actions necessary to collect the account will be taken. These may include collection agencies, and in some cases, turning the check over for prosecution. NSF check laws vary state to state. It is important to be informed about the ones governing your state.
4) If a decision is made to accept repayment arrangements on an NSF check, it needs to be closely monitored and short in duration. Phone calls on NSF checks should be immediately followed up with letters.
If all collection efforts fail, it is imperative to take further action as soon as possible. Statistically, the further accounts receivable age, the chances of recovery diminish.
Tomorrow I'm going to start writing about the advantages and disadvantages of renting, leasing and buying equipment for businesses.
Until then,
Alan
Every small business needs a well planned system to actively monitor accounts receivable. For a system to be successfully implemented, consider the following:
1) Do most customers get paid on a regular basis for their goods and services, or are they contractual businesses who get paid on an irregular basis? It is a good idea to split these customers into categories according to criteria.
2) For regular paying customers, a collection system needs to be in place consisting of three phone calls and three letters. The first phone call is informative notifying the customer of the past due amount and obtaining a date for payment. The second phone call is made three days after the promised due date and references the first call and promised due date and the fact that payment has not been received. The customer is told that payment is due immediately, setting the date. The third phone call is to say that if payment in full is not received within forty eight hours, all action necessary to collect on the account will be taken. This may include obtaining the services of a collection agency and/or attorney. Each of the phone calls should be formalized in letter form and mailed out immediately following the call.
3) For irregular paying customers, it is necessary to follow the same collection system, only the original payment date is established at the time of purchase. In the case of some contract labor, it might be necessary to extend payment dates, as the customer might not have received expected payment for a completed contract. If this scenario unfolds, require the customer to give constant updates, as on numerous occasions, the customer might be over extended and the amount due to the customer might not cover expenses.
To collect an NSF check:
1) Call the customer to tell him or her that payment is required immediately for the check.
2) Either call or take the check to the bank the customer drew the check on to see if the check will clear. The NSF check may be presented to the customer's bank for payment after it has been returned by your bank.
3) If no payment is received within 48 hours, contact the customer to tell him or her that whatever actions necessary to collect the account will be taken. These may include collection agencies, and in some cases, turning the check over for prosecution. NSF check laws vary state to state. It is important to be informed about the ones governing your state.
4) If a decision is made to accept repayment arrangements on an NSF check, it needs to be closely monitored and short in duration. Phone calls on NSF checks should be immediately followed up with letters.
If all collection efforts fail, it is imperative to take further action as soon as possible. Statistically, the further accounts receivable age, the chances of recovery diminish.
Tomorrow I'm going to start writing about the advantages and disadvantages of renting, leasing and buying equipment for businesses.
Until then,
Alan
Thursday, April 26, 2007
Collection Agencies and Collection Attorneys: Things to Look For When Choosing One
Hi,
When choosing the right collection agency to recover debts for your small business, it is important to investigate the following:
1) The majority of collection agencies work on a contingency basis, and are generally competitive with one another. Call a few agencies in your area to set up sales calls. After talking to a few salespeople, you will know what the going rates are for collection assistance in your area.
2) If your accounts are across the U.S.A., it is important to deal with a collection agency that has offices across the country.
3) It is generally a good idea to visit the office of the collection agency to get a feel for how they do business. When visiting the office, inquire about the agency's reporting procedures on the status of accounts turned over to them for collection.
4) Make a phone call to the Better Business Bureau and the office the State Attorney General to find out if any complaints have been lodged against the agency.
On larger accounts, small businesses may want to consider using a collection attorney. Collection law is fairly basic and therefore many attorneys can do the job, although few care to get involved in the field. Due to the exorbitant fees attorneys charge, it is prudent to get a collection attorney that will operate primarily on a contingency basis. To find a contingency attorney that is right for you, consider some of the following:
1)Negotiate a flat rate for legal demand letters, as often that is all it will take to settle the account.
2) Obtain the amount of all costs involved in filing lawsuits in your area, so when the time comes, you will be aware of that expense.
3) Set up a reasonable reporting schedule in order to be informed about the current status of accounts. This will eliminate unnecessary costly phone calls to the attorney.
4)When selecting a collection attorney, consider using the services of a newer law practice which might have more time to devote to your needs.
If all internal collection efforts have failed, utilizing either one of these methods may be a better decision than carrying delinquent accounts until the statue of limitations has expired.
Tomorrow I am going to start talking about how to set up a credit and collection system for a small business.
Until then,
Alan
When choosing the right collection agency to recover debts for your small business, it is important to investigate the following:
1) The majority of collection agencies work on a contingency basis, and are generally competitive with one another. Call a few agencies in your area to set up sales calls. After talking to a few salespeople, you will know what the going rates are for collection assistance in your area.
2) If your accounts are across the U.S.A., it is important to deal with a collection agency that has offices across the country.
3) It is generally a good idea to visit the office of the collection agency to get a feel for how they do business. When visiting the office, inquire about the agency's reporting procedures on the status of accounts turned over to them for collection.
4) Make a phone call to the Better Business Bureau and the office the State Attorney General to find out if any complaints have been lodged against the agency.
On larger accounts, small businesses may want to consider using a collection attorney. Collection law is fairly basic and therefore many attorneys can do the job, although few care to get involved in the field. Due to the exorbitant fees attorneys charge, it is prudent to get a collection attorney that will operate primarily on a contingency basis. To find a contingency attorney that is right for you, consider some of the following:
1)Negotiate a flat rate for legal demand letters, as often that is all it will take to settle the account.
2) Obtain the amount of all costs involved in filing lawsuits in your area, so when the time comes, you will be aware of that expense.
3) Set up a reasonable reporting schedule in order to be informed about the current status of accounts. This will eliminate unnecessary costly phone calls to the attorney.
4)When selecting a collection attorney, consider using the services of a newer law practice which might have more time to devote to your needs.
If all internal collection efforts have failed, utilizing either one of these methods may be a better decision than carrying delinquent accounts until the statue of limitations has expired.
Tomorrow I am going to start talking about how to set up a credit and collection system for a small business.
Until then,
Alan
Wednesday, April 25, 2007
Collection Phone Calls
Hi:
Many small business owners avoid calling their past due accounts for a variety of reasons. The most common one is that they do not want to create ill will with their customers. The second reason is that they do not have the time to set aside to make the initial calls, and then to follow up on those calls. What a business owner says during his or her initial call to a customer can determine whether or not a customer will bring his account current. There is a standard set of three collection calls a business owner may consider using:
1) The first call is pleasant and firm, providing the customer with the exact amount that is past due. Whenever possible, a payment date should be set during the phone call.
2) The second call is short and to the point. The customer needs to know that the business owner will take whatever action necessary to collect the account. Once again, determining a specific payment date is very important.
3) If no payment is received by the specific date, it is important to give the customer one last phone call notifying him or her that the account will be turned over to a third party (collection agency/attorney) for collection.
If a business owner decides to accept a repayment schedule from a client, notify the client that it will be put in writing and mailed to him or her. It is important never to tell a client a collection technique will be implemented, if there is no intention of following through with it. If a business owner has past due accounts, but not the time or inclination to pursue them, hiring a part time employee to make collection calls might be an option.
Tomorrow I'm going to write about how to select a good collection agency or attorney.
Until then,
Alan
Many small business owners avoid calling their past due accounts for a variety of reasons. The most common one is that they do not want to create ill will with their customers. The second reason is that they do not have the time to set aside to make the initial calls, and then to follow up on those calls. What a business owner says during his or her initial call to a customer can determine whether or not a customer will bring his account current. There is a standard set of three collection calls a business owner may consider using:
1) The first call is pleasant and firm, providing the customer with the exact amount that is past due. Whenever possible, a payment date should be set during the phone call.
2) The second call is short and to the point. The customer needs to know that the business owner will take whatever action necessary to collect the account. Once again, determining a specific payment date is very important.
3) If no payment is received by the specific date, it is important to give the customer one last phone call notifying him or her that the account will be turned over to a third party (collection agency/attorney) for collection.
If a business owner decides to accept a repayment schedule from a client, notify the client that it will be put in writing and mailed to him or her. It is important never to tell a client a collection technique will be implemented, if there is no intention of following through with it. If a business owner has past due accounts, but not the time or inclination to pursue them, hiring a part time employee to make collection calls might be an option.
Tomorrow I'm going to write about how to select a good collection agency or attorney.
Until then,
Alan
Monday, March 19, 2007
When A Business Should Use A Collection Agency: Part 1
Hi,
There are many different reasons why all kinds of businesses hesitate to utilize collection agencies. Over the next couple of days I am going to discuss some of the fears and misgivings companies have about whether or not to turn their accounts receivables over to collection agencies. One of the most common fears businesses have is that it will hurt their public image. Businesses provide goods and services, expecting to be paid. When customers don't pay, pursuing payment is a normal course of business action. Another common fear is that collection agencies operate outside the law and without professionalism. The best way to alleviate this fear is to go to the collection agency and become comfortable with the people and surroundings. The last major objection businesses have in turning their accounts over to collection agencies is the cost which is almost always on a contingency basis, ranging from 10%-50% of the amount owed. This objection is understandable. However 50%-75% of something is better than 100% of nothing. Large corporations generally have an intermediary step in the collection process, as they have an in-house collections department. Statistically, by the time an account goes through the collection process from the credit department to the collections department, the company's chance of successfully recovering payment on that account is almost nil. As I've referred to in previous blogs, many large companies have gotten away from professional collectors and replaced them with customer service people who have only a generic menu available to resolve accounts. Three major reasons a large corporation should send an account to a collection agency:
1) The account will be serviced by a person skilled in the collection process, and who specializes in the field of difficult collections.
2) If accounts need to be litigated, they can be assigned to the collection agency and therefore sued under the collection agency's name. This helps to preserve the corporation's public image.
3) Sending accounts to collection agencies allows companies a partial recovery on accounts which would otherwise be charged off.
These are just some of the reasons companies should take advantage of utilizing collection agencies. Due to the generic approach large companies are taking in regards to collections, the personal touch used by collection agencies may make the difference in the successful resolution of past due accounts. Tomorrow I will talk about the benefit of collection agencies for small businesses.
Until then,
Alan
There are many different reasons why all kinds of businesses hesitate to utilize collection agencies. Over the next couple of days I am going to discuss some of the fears and misgivings companies have about whether or not to turn their accounts receivables over to collection agencies. One of the most common fears businesses have is that it will hurt their public image. Businesses provide goods and services, expecting to be paid. When customers don't pay, pursuing payment is a normal course of business action. Another common fear is that collection agencies operate outside the law and without professionalism. The best way to alleviate this fear is to go to the collection agency and become comfortable with the people and surroundings. The last major objection businesses have in turning their accounts over to collection agencies is the cost which is almost always on a contingency basis, ranging from 10%-50% of the amount owed. This objection is understandable. However 50%-75% of something is better than 100% of nothing. Large corporations generally have an intermediary step in the collection process, as they have an in-house collections department. Statistically, by the time an account goes through the collection process from the credit department to the collections department, the company's chance of successfully recovering payment on that account is almost nil. As I've referred to in previous blogs, many large companies have gotten away from professional collectors and replaced them with customer service people who have only a generic menu available to resolve accounts. Three major reasons a large corporation should send an account to a collection agency:
1) The account will be serviced by a person skilled in the collection process, and who specializes in the field of difficult collections.
2) If accounts need to be litigated, they can be assigned to the collection agency and therefore sued under the collection agency's name. This helps to preserve the corporation's public image.
3) Sending accounts to collection agencies allows companies a partial recovery on accounts which would otherwise be charged off.
These are just some of the reasons companies should take advantage of utilizing collection agencies. Due to the generic approach large companies are taking in regards to collections, the personal touch used by collection agencies may make the difference in the successful resolution of past due accounts. Tomorrow I will talk about the benefit of collection agencies for small businesses.
Until then,
Alan
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