Your small or medium sized business can suffer quickly, with long-lasting repercussions, if even one payment is missed. Your cash flow depends on a steady stream of reliable payments from your clients. How do you know when it’s time to hire a collection agency to deal with your outstanding invoices, and what sorts of things should you be doing before that step is even considered? You have legitimate receivables that need to be collected for the sake of your company’s financial health, and a collection agency is a great option when you can no longer do it yourself.
The unfortunate reality is that some customers just won’t pay up, no matter how many steps you take to try to get reimbursed for your services. In an SME environment, it becomes crucial to have a debt collection plan in place, and to track your invoices as closely and immediately as possible.
Before you decide to go ahead and look to outside help, it is important to consider whether or not you’ve taken all the necessary steps within your power to collect those overdue payments. These actions can be undertaken via the internal processes and collection policies within your operation. They can include things like prompt invoicing, partial advance payments, incentives for early payments, and establishing very clear follow-up procedures for past due fees. Ensure that whatever invoicing system you use can effectively flag those overdue accounts, and have a system in place to begin to address these outstanding bills without delay. Invoice reminders, phone calls, and emails or letters to your client should be attempted with an increasingly firm tone (remember to stay professional and courteous!) before you outsource to a third party.
Once you have taken all the steps for bill-chasing within the confines of your business, it is time to consider a collection agency. Before you begin, it is imperative to do as much research as possible. You need to understand what makes a good collection agency vs a bad one, which ones are the best fit for your particular needs and industry, and who is experienced and has great reviews. With the appropriate amount of investigation before you decide who to go with, you will find the right fit for your business needs.
Your odds are greatly increased when you choose to hire a collection agency. Recovering the debts from those delinquent accounts are the agency’s primary focus, whereas you have lots of other tasks to focus on to keep your business running effectively. Take advantage of these professional services to aid the process of debt recovery; their arsenal of strategies for coercion can only help you. They are trained to understand how much aggression, persistence, and threats to a non-paying consumer will be the most effective, and they’re also entitled to report these debts to credit bureaus. The risks of negative credit scores that spring from collection agencies are often enough to compel a client to pay immediately!
Agencies who deal with collecting overdue fees have a level of knowledge and experience that business owners and their employees often lack. Hiring this outside help can hugely benefit your cash flow, even with the extra outgoing fees to retain the service, because they will save time and money at the end of the day. You need to get paid, so allow a qualified and efficient professional take this task off your hands and reap the benefits of increased profitability and less stress!
Here are a few tips on how to recognize when it’s time to use a collection agency.
When a customer with an outstanding bill denies any responsibility, it is a really good clue that it’s time to enlist some help. Instead of writing off this unpaid account, a good collection agency will increase the chances of actually getting some positive movement for you. These strategies can also be used when your client is making a lot of unfounded complaints. Such difficult customers are best left to highly trained collection practitioners.
No payment past 60-days is a pretty good indicator that you will be unable to solicit any amount from a tardy client. Waiting for payments to come in is no time to be patient–you have to go after all overdue accounts immediately in order to have the highest chance of payment in the first instance of delay. After 60 days, it is generally beyond your capabilities to force payment in any percentage. An agency is your best bet.
When your client is nowhere to be found, they’re probably not planning on paying off that invoice! Debt collection professionals have more resources for effective tracking when it comes to those debtors who have disappeared. Not only are they more likely to find the offender, they are also better at applying the right amount of pressure to get your money.
Freelancers can be especially wary about outsourcing debt help, or having the right information to understand when this help is needed. They are also especially prone to financial disaster if their clients miss even the smallest payment. If you are a freelancer, and you find that you have a customer who repeatedly misses payments, your payment terms were breached, or you’ve waited for a payment for more than 90 days, it is definitely time to look to outside help.
Debt collection is never an enjoyable part of business, but it is necessary for your financial health. It’s hard to know when to tow the line a little bit, or when you’re being too firm. Hiring an agency is a great way to let someone else take these worries off your shoulders, and enlisting their help should come sooner rather than later. The longer you wait, the less likely you are to be paid.
Invoice Tracker is another method of collection you can outsource for your company. Automating your accounts receivable and features such as email reminder sets, detailed reporting, and instant online payment options mean that you will get paid faster. Try our 30-day free trial today, and save time and money.