It’s the nature of the beast, the law of averages. Whatever you choose to call it – some of your accounts are going to end up past due. You’re going to have to call on a professional to help you collect.
So, you hand the account off. It’s up to the agency now. You’ve done all you can. Right? Maybe.
In my 40 years in this industry there’s plenty you can do to stack the deck in favor of getting the money you’re owed. Here are my eight suggestions to get the most out of your Commercial Collection Agency.
#1 Submit Claims Early
The number one factor affecting collectability of delinquent receivables placed with a collection agency is the age of the account when placed. And the number one mistake creditors make on past due accounts is waiting too long before placing them.
When an account has hit 90 days past due, sometimes even sooner, the creditor has lost leverage. It’s time for third party intervention. The longer you wait, the more likely the debtor will go out of business, file bankruptcy, or simply disappear. At that point, your options become extremely limited.
As soon as a customer stop paying on time, suspend further shipments and begin your own collection efforts. If the customer hasn’t paid or set-up a payment plan by 60-90 days past due, place the account with an experienced and reputable collection agency like Revenue Assurance Partners. If your customer promises payment and doesn’t follow through, submit the claim immediately.
#2 Submit Collection Accounts to your Salesperson or online Portal
Once you’ve decided to submit an account to a third party, you want them to get going as soon as possible. (Remember, Step 1. Time is a critical factor.) The quickest way to get your claim entered into our collection system is to submit it through your dedicated client portal or your Sales Representative. Why is this so important?
To kick-start the handling of your account, it’s essential to follow your agency’s instructions about how to submit new claims.
#3 Provide Complete Documentation and Information at Placement
Here again, time is critical. While Revenue Assurance Partners can start working a claim with just the debtor contact information and amount owed, collectors usually need documentation to enforce or validate their demands on the debtor. Especially in this digital and scam wrought environment that we currently live in. Collection efforts are much more effective, and efficient, if we have a full understanding of the details of the claim up-front and can provide the documentation, if requested, to the debtor immediately.
Send everything you have that helps to substantiate the debt, that provides insight into your relationship with the debtor, and that can improve the collectability of the account.
Here’s a listing of information that, if submitted up-front, can reduce collection time by weeks, and greatly improve your chances of getting paid:
- Clear and concise Statement of Account
- Summary of in-house collection efforts; status of account when placed
- Accurate and complete debtor information including the legal name of the customer, not a dba
- Copies of invoices, purchase orders, credit application, contract
- Copy of signed personal guarantee
- Any correspondence (letters, faxes, emails) related to the past due account, especially anything from the customer admitting to the debt
- Bills of lading, bills of exchange Proof of delivery
To be sure you always have complete documentation available, be proactive and protect your interests. Handle every sale as if it might turn into a collection account by fully documenting each step in the transaction and saving all relevant correspondence between you and your customer.
#4 Do Not Talk to the Debtor Once You’ve Placed the Account
It’s possible that, as soon as the customer receives Revenue Assurance Partner’s call, text, email, or collection demand letter, he’ll contact you to try to convince you to give him more time or accept a compromise. Don’t go there. If you’ve resorted to placing the account with a third party, you’ve already given the debtor more than enough time to pay. Speaking with him again just gives him an opportunity to play you off against your own representative. The outcome usually is that you end up with less or no money.
Follow the advice of the Credit Research Foundation (CRF):
“Unless there is a good reason for you to become involved (i.e. a return of merchandise or a valid claim that reduces the amount owing and you issue a credit memo), do not interfere with the process between your customer and the agency. You hired the agency, so let them do their job.”
#5 Keep the Collector Up to Date on Any New Information
If you receive a payment, let the collector know. If the collector calls the customer with inaccurate information, it will only increase the debtor’s frustration level, making him more reluctant to cooperate.
If you find out the customer has moved, filed bankruptcy, sold off to another company, etc. it’s essential that the collection agency gets this information as soon as possible. Time is the enemy in debt collection. The sooner the collector has the information, the sooner it can be acted upon, increasing the likelihood of success.
#6 Don’t Micromanage the Account
Give your agency time to do its job and get back to you. If they suggest advancing your file 15, 30 or 45 days, there is a reason. The more time the collector must spend answering unnecessary requests for information, the less time there is to work on collecting your account.
It will also be helpful if you don’t require “routine” reports on files. Allow the collector to do his primary job – collecting – and expect reports only when there’s a new development or something significant.
This doesn’t mean you shouldn’t try to stay on top of the agency’s efforts. They work for you, not the other way around. Revenue Assurance Partners believes in complete transparency to the assets you have entrusted with us to collect. Therefore, we provide our clients access to account status via RAPDIRECT, giving you the ability to check on the status of a file on demand 24/7/365. Take advantage of this option to make your job easier, as well as the collector’s.
#7 Respond ASAP to Agency Requests for Information or Authorization
Again, time is not on your side. At Revenue Assurance Partners we’ve seen instances where delayed responses from creditors have closed a window of opportunity to collect. Some accounts end up being written off as uncollectable simply because we haven’t received the information we needed from the client.
#8 Trust Your Agency
The most important bit of advice I have is to trust your debt collection agency. If you’ve chosen a highly recommended, reputable company, with years of experience, like Revenue Assurance Partners you can count on the fact that they will represent you honestly and professionally. Once you’ve placed your receivable in their hands, support their efforts. Remember you are partners, working toward the same goal. It’s as important to the agency to collect your account as it is to you to receive payment.
President/CEO
Revenue Assurance Partners
