Commercial Collections Blog

Turning Accounts Over to Collections

Turning Accounts Over to Collections
The Facts of Business Life

There are a number of aspects of business life that make it both rewarding and challenging. You start a company and build it to create satisfied customers and to make a profit. That process includes a number of steps and many of them have to do with managing your working capital and cash flow.

Your goal is to grow and enjoy success. The more you achieve this, the more of a challenge you have in maintaining the close personal touch you desire with each of your customers. While you use a number of methods and effective CRM procedures, the simple fact is that many customers go on your list of accounts receivable without a close relationship being established.

Another fact is that as you grow, the issue of delinquent accounts becomes more of a concern. It is a law of large numbers that as your customer list grows the number of those customers who will be late in paying will also increase. There are numerous reasons and factors involved in the process, but the net result is that you have to consider the issue of debt collection for these delinquent accounts.

Collecting Accounts Receivables

The first hurdle for many business owners to overcome is the necessity of dealing with the debt collection process. Most entrepreneurs and people who have grown their businesses are empathetic to the issue of tight cash flow and the pressure of paying all the bills outstanding. Even managers of large companies often hesitate to put any pressure on loyal and struggling customers.

The fact is that collecting the debts you are legally owed is actually an ethical responsibility of any business owner. You are not in business to finance others, and carefully managing your cash flow is, in fact, an ethical responsibility to your employees, investors and bankers. It may be an unpleasant responsibility, but it is there, nonetheless.

The challenge, of course, is to approach the responsibility of debt collection in a professional, ethical and empathetic way. There are many resources and vehicles that allow you to deal with delinquent accounts in this manner. The issue is for you to take the time to carefully review all these options and select those that reflect your personal and corporate values.

Automating the Personal Touch

As noted, maintaining a personal touch with your customers becomes more of a challenge with success and growth. The irony is this personal touch was a factor in your growth, and losing it can be a big negative dynamic. Fortunately, modern technology exists that allows at least some lessening of the effects of that reality. With a corporate priority of maintaining a focus on customers, and the use of systems that make that easier, you will stand a good chance of beating your competition in this area that is important to most customers.

It makes sense, then, to carry this attitude over to the management of your accounts receivable. When growth means the death of the days when Betty or Bob knows that Acme is behind on an invoice, and a short call will solve the problem, the right systems have to be installed. The great thing is that you have the choice in determining what those systems do and how they are used.

The very word system indicates that there is a process that automatically deals with the issue. When it comes to your A/R, that system would automatically notify management on a regular basis of what accounts are past the agreed payment schedule. Such notification should include details such as amounts, total delinquency, past payment performance, length of time as a customer, total sales, and other such information. The optimized system would also include comments and observations from sales and other sources that might give a hint as to the reason for late payment.

With this first critical step of making sure that the right person in management is at least aware of the status of accounts that are delinquent, you are in control of the situation. It is at this point that you can exercise individual judgment and determine the appropriate course of action. Those factors will differ from industry to industry. In some cases, many accounts may automatically be turned over to the professional collection agency that you have carefully chosen for the methods they use. In other situations, personal calls from management or sales may be the appropriate course of action before turning them over to your commercial collection firm. Remember, the goal is to be in control and manage the process.

You can see that you have a number of options and decisions to make. Going back to facts, however, you simply must fully address the issue of collecting from your customers in a timely and thorough manner. When the time comes that a commercial collection agency is the right step, ensure you select the firm that treats those overdue accounts in the manner you desire.

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Debt Collection News

  • Buchanan County Court News

    March 19, 2018
    Holly Erin Opperman, Jesup, medical debt collection, judgment entered in favor of plaintiff in the amount of $790.04 with 4.01 percent interest from Jan. 26, 2018 and court costs payable in installments of $100 per month starting April 13, 2018 until paid in full, payments shall be made directly to plaintiff.
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    March 19, 2018
    Education Secretary Betsy DeVos made clear even before taking office last year that she was more interested in protecting the companies that are paid by the government to collect federal student loan payments than in helping borrowers who have been driven into financial ruin by those same ...
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    March 18, 2018
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  • As Tax Day Approaches, AG Schneiderman Issues Consumer Alert On Frequent Tax Season Scams

    March 18, 2018
    By Long Island News & PR Published: March 19 2018 ... Consumers should be aware that, starting this year, debt collectors representing the IRS may call consumers to collect tax debts. ... Legitimate government agencies will never insist that consumers pay a debt only via a prepaid credit card.