Hi,
Many small businesses have the same credit and collection problems as large corporations, only they do not have the staff to address these problems. If a small business owner is experiencing an increasing collection problem, it is important to identify the reasons why. In order to do that here are some suggestions of things to look at:
1) Is there a definitive credit policy for extending credit to individuals or other businesses?
2) When an account is opened, is the time taken to verify the information on the credit application? If there isn't a formal credit application, one might be considered.
3) If NSF checks seem to be a continual problem, investigate obtaining a machine to electronically process checks at point of sale. If that is not an option, make sure all pertinent information about the customer necessary to collect on the check in case it's returned is recorded on the check.
4) Is a maximum limit set on charge accounts? Notify the customer of the maximum limit when the account is opened, and if the limit is exceeded, immediately inform the customer.
Customers of small businesses expect to be paid when they perform services or deliver goods to people and will not be offended when a business owner wants to be paid by them. If they do take offense, they're probably not the type of customer a business ultimately wants. If contacting customers is not a strength, one might consider hiring a part time person to call past due customers on behalf of the business. The final step is to turn delinquent accounts, NSF checks etc., over to a professional for collections. This should be done promptly, because the success of collecting on a past due account diminishes with time.
Tomorrow I'm going to talk about specific types of collection calls.
Until then,
Alan
Showing posts with label past due accounts. Show all posts
Showing posts with label past due accounts. Show all posts
Monday, April 23, 2007
Tuesday, March 13, 2007
Entering the World of a Collection Agency
Hi,
In yesterday's blog, I discussed some of the types of people collection agencies deal with on a daily basis. Now let's look at the mission statement of a collection agency and examine some of the common misconceptions about collection agencies. The mission statement of a collection agency is to recover as much money as possible on any account given to them by their clients. Their goal is to achieve this under any means possible allowed by the Fair Debt Collection Act. Some of the common misconceptions about collection agencies are:
1) Collectors enjoy harassing people at home and at work. Fact: Every collector on the planet would like to resolve an account with one phone call. The only reason for additional phone calls on an account are due to broken payment arrangements.
2) Collectors are unreasonable when it comes to accepting settlement offers on accounts. Fact: Creditors have already lost anywhere from 15%-50% on their bill, and as a result are much more unlikely to accept low settlement offers. As collectors are paid a small salary plus commission on the amount they collect, they are highly motivated to take any reasonable settlement and offer it to the creditor.
3) Skip tracers practice unethical business behavior. When skip tracing professional deadbeats, skip tracers on occasion might represent themselves to neighbors, coworkers etc., as a friend of the debtor to obtain pertinent contact information.
4) Collectors are hard nosed and inflexible. Fact: Due to the nature of the business, collectors are constantly under a lot of stress. Certainly they have their bad and good days as do all of us. But, they are primarily paid on commission and are very interested in resolving accounts as quickly and efficiently as possible.
It's important when dealing with a collection agency to remember that the collector you are talking to is used to broken arrangements, broken promises, and in many cases, verbal abuse. If you communicate honestly, he or she will be more than happy to resolve your account as quickly as possible to your mutual satisfaction. Tomorrow, I'll write in detail about the collection process.
Until then,
Alan
In yesterday's blog, I discussed some of the types of people collection agencies deal with on a daily basis. Now let's look at the mission statement of a collection agency and examine some of the common misconceptions about collection agencies. The mission statement of a collection agency is to recover as much money as possible on any account given to them by their clients. Their goal is to achieve this under any means possible allowed by the Fair Debt Collection Act. Some of the common misconceptions about collection agencies are:
1) Collectors enjoy harassing people at home and at work. Fact: Every collector on the planet would like to resolve an account with one phone call. The only reason for additional phone calls on an account are due to broken payment arrangements.
2) Collectors are unreasonable when it comes to accepting settlement offers on accounts. Fact: Creditors have already lost anywhere from 15%-50% on their bill, and as a result are much more unlikely to accept low settlement offers. As collectors are paid a small salary plus commission on the amount they collect, they are highly motivated to take any reasonable settlement and offer it to the creditor.
3) Skip tracers practice unethical business behavior. When skip tracing professional deadbeats, skip tracers on occasion might represent themselves to neighbors, coworkers etc., as a friend of the debtor to obtain pertinent contact information.
4) Collectors are hard nosed and inflexible. Fact: Due to the nature of the business, collectors are constantly under a lot of stress. Certainly they have their bad and good days as do all of us. But, they are primarily paid on commission and are very interested in resolving accounts as quickly and efficiently as possible.
It's important when dealing with a collection agency to remember that the collector you are talking to is used to broken arrangements, broken promises, and in many cases, verbal abuse. If you communicate honestly, he or she will be more than happy to resolve your account as quickly as possible to your mutual satisfaction. Tomorrow, I'll write in detail about the collection process.
Until then,
Alan
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