3 Ways You Can Increase the “Potency” of Third Party Collections
Written by Danielle Woller, Litigation Assistant, Brown & Joseph, Ltd. August 13, 2013.
It is no secret that Accounts Receivable departments, across all industries, have no shortage of work. That's why many companies enlist the services of professional debt collectors to recover outstanding balances. However, though these agencies provide these services to companies to alleviate pressure on A/R, there a few simple processes that can be put in place in order to better utilize collection agency services and increase chances of collection.
Keep a contact person with each company. If possible, address each invoice to the person who makes the financial decisions, and make sure you have their telephone number, with extension. This may be one of the single most important things a company can do to increase collection on outstanding debt. Ensuring that you have up to date information on the decision makers (and, more importantly, those authorized to write the checks) will decrease lag time between placement and first contact with persons who are able to resolve the debt. It is not uncommon for small business owners to close down operations or sell the business and move on; or for agents and employees to sign contracts with creditors only to leave or get laid off before the debt is paid. Maintaining contact with the principal or appropriate executive eliminates the need for multiple phone calls and messages or extensive skip tracing to identify the proper person to contact to resolve unpaid debt. Fortunately, one of the best ways to go about making sure your information is current can be relatively easy.
Don't wait 30 days from the date of service or delivery of the product to send invoices? Where possible, invoice each 15 to 30 days. The best thing you can do is get on the schedule and radar of the company that owes you money. And follow up! A lot of small businesses are struggling to pay their bills, and, while many of them would prefer not to admit that, making your presence known can help you to find out where the problem lies. If you can open up communication with the customer and establish some timeframes, you may be able to work out a mutually beneficial payment plan (or, alternatively, arm your debt collection professionals with additional insight into the situation and best times to make contact). Good debt collection specialists are trained to work with businesses and are equipped with the knowledge and technology to know when to follow up and the most productive ways to do it. It's what they do. So, the more information you can provide at initial placement the better they will be able to do their job and get your company results.
Send agencies as much documentation as is reasonable. Previous collection notes and correspondence is invaluable information to collection specialists. Without it, it may take 2 conversations or more to obtain information that the customer may have already explained to one of your company's A/R representatives. And, that is exactly how most customers with outstanding debts prefer it. It buys them more time to continue putting off payment of the balance owed to your company. Meanwhile, they may be paying other creditors. The idea is always to make sure that your company is at the top of their list. As previously stated, plenty of businesses are trying to juggle payments to continue to operate and generate income. But they have to be paying someone if the doors are still open, right? When supplied with a detailed account history, a good third party collections firm will be able to utilize it to save time and focus on ensuring that your company is top priority.