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
Showing posts with label small business. Show all posts
Showing posts with label small business. Show all posts
Thursday, April 26, 2007
Tuesday, April 24, 2007
Collection Letters
Hi:
Many small business owners are hesitant to send collection letters and/or call clients that have past due accounts. The primary reason is that they are afraid of alienating their customers. Familiarity with collection techniques can give small business owners the confidence to contact past due customers. Here are some suggestions for effective collection letters:
1) The initial letter sent to a customer should be informative but firm. When the customer reads the letter, he or she should realize that immediate payment is required, or payment arrangements made with the creditor. Stamping a bill past due, in itself, is not a successful means of collection.
2) The second collection letter sent to a customer should give a specific date by which payment needs to be received, or the business owner will take whatever actions deemed necessary to collect the account.
3) The final letter to the customer should inform the customer that their account has been turned over to a collection agency/attorney for collection.
Due to time restraints, many business owners don't contact their customers quickly enough when their accounts become past due. A customer who is experiencing hard times, will oil the squeaky wheel. When people hear that their account is past due, it's harder for them to ignore the call, than it is for them to set aside written communication. If a business doesn't have the time or inclination to make collection calls, it is wise to investigate hiring a part-time person to make the calls on behalf of the business. Tomorrow I'm going to write about different types of collection calls and what type of payment arrangements are the most successful.
Until then,
Alan
Many small business owners are hesitant to send collection letters and/or call clients that have past due accounts. The primary reason is that they are afraid of alienating their customers. Familiarity with collection techniques can give small business owners the confidence to contact past due customers. Here are some suggestions for effective collection letters:
1) The initial letter sent to a customer should be informative but firm. When the customer reads the letter, he or she should realize that immediate payment is required, or payment arrangements made with the creditor. Stamping a bill past due, in itself, is not a successful means of collection.
2) The second collection letter sent to a customer should give a specific date by which payment needs to be received, or the business owner will take whatever actions deemed necessary to collect the account.
3) The final letter to the customer should inform the customer that their account has been turned over to a collection agency/attorney for collection.
Due to time restraints, many business owners don't contact their customers quickly enough when their accounts become past due. A customer who is experiencing hard times, will oil the squeaky wheel. When people hear that their account is past due, it's harder for them to ignore the call, than it is for them to set aside written communication. If a business doesn't have the time or inclination to make collection calls, it is wise to investigate hiring a part-time person to make the calls on behalf of the business. Tomorrow I'm going to write about different types of collection calls and what type of payment arrangements are the most successful.
Until then,
Alan
Tuesday, March 20, 2007
Benefits of Collection Agencies for Small Businesses
Hi,
Small businesses have two distinct disadvantages over large corporations in that they usually have no credit or collection departments. This results in accounts receivable with no one available to monitor or resolve them. The business owner is generally busy with other tasks, and his or her small staff is usually strictly clerical. Many times credit is extended due to familiarity with the customer rather than by the approval of pertinent credit information. These factors contribute to small businesses having an higher than average collection problem with their accounts receivable. The business owner fears that customers will be driven away if their delinquent accounts are pursued. It is not uncommon for business owners to have tens of thousands of dollars in very delinquent accounts. Another collection problem for small businesses may still be NSF checks, as they may not have the electronic system in place for point of sale verification. Because small businesses lack the staff to effectively collect on NSF checks, it's imperative that they utilize a third party collection system as soon as possible. In most instances, a collection agency is a perfect fit for a small business. Years ago I had a friend who was a salesman for a collection agency. He told me the story of a small business owner who had a shoe box with dust on it full of NSF checks. It took many, many visits before the salesman was able to convince the owner to give up the shoe box. When he finally did, it contained over 120 NSF checks, some over three years old. Within two weeks, the collection agency had collected over $6,000. of the checks for the business. This is one example of many in which accounts receivable or NSF checks gathering dust are not putting any dollars back into the business. In dealing with NSF checks in particular, the chances of recovery diminish with each passing month. As a small business owner, it is always important to remember that you are entitled to be paid for your goods and services provided to your customers. When you have the need of utilizing outside collection services on your accounts you are exercising your rights as a businessperson. Tomorrow, I'll talk about NSF checks.
Until then,
Alan
Small businesses have two distinct disadvantages over large corporations in that they usually have no credit or collection departments. This results in accounts receivable with no one available to monitor or resolve them. The business owner is generally busy with other tasks, and his or her small staff is usually strictly clerical. Many times credit is extended due to familiarity with the customer rather than by the approval of pertinent credit information. These factors contribute to small businesses having an higher than average collection problem with their accounts receivable. The business owner fears that customers will be driven away if their delinquent accounts are pursued. It is not uncommon for business owners to have tens of thousands of dollars in very delinquent accounts. Another collection problem for small businesses may still be NSF checks, as they may not have the electronic system in place for point of sale verification. Because small businesses lack the staff to effectively collect on NSF checks, it's imperative that they utilize a third party collection system as soon as possible. In most instances, a collection agency is a perfect fit for a small business. Years ago I had a friend who was a salesman for a collection agency. He told me the story of a small business owner who had a shoe box with dust on it full of NSF checks. It took many, many visits before the salesman was able to convince the owner to give up the shoe box. When he finally did, it contained over 120 NSF checks, some over three years old. Within two weeks, the collection agency had collected over $6,000. of the checks for the business. This is one example of many in which accounts receivable or NSF checks gathering dust are not putting any dollars back into the business. In dealing with NSF checks in particular, the chances of recovery diminish with each passing month. As a small business owner, it is always important to remember that you are entitled to be paid for your goods and services provided to your customers. When you have the need of utilizing outside collection services on your accounts you are exercising your rights as a businessperson. Tomorrow, I'll talk about NSF checks.
Until then,
Alan
Subscribe to:
Posts (Atom)
