Unfortunately, businesses don’t always pay their bills on time. If your company is struggling to manage and collect on past due commercial accounts, commercial collections technology might be able to come to your rescue. There are many commercial collections software solutions on the market that might be able to help you clear more of those old invoices. But which commercial collections software is the right choice for your business?
When it comes to collecting debts from a business in another state or country, it’s important to be aware of the laws in both your own location and the location of the business in question. While it’s always a good idea to understand your potential client’s regional situation, when it comes to debt collection you’ll want to be extra careful. Doing business with partners in other parts of the world isn’t a bad thing, of course, but it can complicate your collections process if you don’t do your research beforehand.
The debt collection industry functions much differently than it used to. A lot of this has to do with the introduction of automation and self-service technology. Over the course of just a few years, these advancements have made it possible to reduce the amount of time spent on the tasks that were once monotonous and labor-intensive. In some cases, those tasks are able to be eliminated altogether all while improving the likelihood of receiving the payment that you’re owed.
If you are in the service business and are often in the situation of having outstanding receivables there may be struggles getting your money back from time to time. Sometimes, the money you lent to a borrower is returned later than expected, creating a negative cash flow which can be a stressful situation. When other businesses owe you money, your team should have a clear and defined process to follow for reaching out and trying to collect. But if they have to wait days for a response, and sometimes wait all that time without getting a response, the time can stack up to work against you.
It’s happened: you’ve received a letter saying that a customer of yours has filed for bankruptcy to resolve their debt problems. While this can be a frustrating situation, don’t waste your time worrying about what may or may not happen. Depending on your customer’s bankruptcy details, acting quickly could result in repayment for a portion or even all the unpaid debt you are owed. The debt collection process in cases of bankruptcy are not as strenuous as many companies seem to think, especially if you know what your options are. This article will explain what happens when someone you’re trying to collect from files for bankruptcy and how to move through the debt collection process.
As a business, it can be frustrating watching days, weeks, or even months pass by while you wait for reimbursement for your valuable time, products or services. Afterall, the saying “time is money” holds true when it comes to unpaid debts. According to figures from Inside Account Receivables Management, by the time receivables are 90 days overdue, they could be worth only 20% of their original value.
So, how do you create a sense of urgency for your debtors to take prompt action as opposed to remaining passive? Rather than expend unnecessary time, energy, and resources pursuing overdue invoices, allow us atAlexander, Miller & Associates to help capture the attention of your debtors by using the following powerful techniques:
If you are in collection industry you probably heard about new proposed changes to debt collections law which would affect the way debt collection agencies do business. Consumer Financial Protection Bureau (CFPB) proposed these new regulations with the idea that it will give more protection for small businesses and individuals. Many other commercial debt collection agencies, as well as debt recovery firms, view these newly proposed rules as a hinderance to the way they currently pursue and collect debts from individuals. The precedent has been set for these proposed changes by an earlier recommendation from the CFPB in where they recommended changes to payday lending.
Sometimes negotiations do not work. All the phone calls, demand letters and reasoning will not get a debtor to pay. At times your customer has no intentions in resolving this debt that is rightfully owed to your company and all routine debt recovery practices have been utilized. Times like this takes thinking outside the box and it’s time to get someone in the field making you a priority.
When utilizing a Private Investigator (P.I.) to supplement your debt recovery efforts, timing is the key. It should not be only used as a last minute effort, Private Investigators are to be used to gather info to strengthen your case. It pays to use a P.I. that has experience in debt recovery and asset liability investigations.
When a P.I. goes out to visit a business, their main objective is to gather information to strengthen your debt recovery, not to harass the debtor company or staff. They can interview employees, take pictures of applicable assets and gather as much info as they can prior to being asked to leave. The gathered information can help reinforce your case and also usually results in a call back to the debt recovery agency from the debtor to revisit the case.
A private investigator can also be helpful for different investigative services. These include assisting with skip tracing, asset searches, asset liability investigations, business investigations and collections services. In general, a P.I. is a great tool to keep in your toolbox when you require extra strength and need to dedicate the due diligence to be successful with those difficult debt recovery cases.
When all your internal efforts have failed when dealing with past due receivables, it is time to seek representation from a professional. If you have proper accounts receivables policies and procedures you will most likely assign it to a collection agency first.
Most 3rd party collection agencies work on a contingency basis. You do not pay them until they collect. Their commision is based on a percentage of the dollar amount collected. This is beneficial since it avoids you having to spend good money in efforts of collecting bad money. A debt collection agency, when successful, will typically achieve results quicker, since there are no court dates involved. This also helps because the collection agency will make you a priority when the debt is still fresh in the debtors mind and there will often be less resistance given by the debtor.
A collection agency is structured and equipped to collect debt, not to file lawsuits as an attorney would be. They will have a set of tested and proven legal demand letters to send on your behalf. A collection agency will utilize tools and online services to skip trace, investigate and contact the debtor company.
An attorney can be a valuable asset in your collections process, but a lawyer should always be retained after your 3rd party collection agency exhausted their efforts. In the long run, your accounts would be in far superior shape and prepped for litigation once they are forwarded from your collection agency to your attorney. Remember, it’s a long walk up those courtroom steps, though sometimes a lawsuit is needed. Make sure your collection agency is your first line of defense when dealing with delinquent accounts. Alexander Miller & Associateshave over 60 years of combined industry experience. If you are dealing with delinquent invoices and need representation, contact us for a free consultation. If a lawsuit is necessary we can recommend a CLLA Attorney that will take the case. We look forward to earning your business!
In the past, accounts receivables were considered a basic function. Business owners have finally started to realize, that an effective accounts receivables process can have a measurable financial benefit to your bottom line.
Companies that deal with commercial accounts, generally deal with fewer customers with higher balances, while the consumer based companies deal with more clients with smaller balances in their accounts receivables department. However, the basic function in the AR process generally stay the same.
The Accounts Receivables Process
Remittance – Utilize multiple payment methods;
Credit Management– Make sure customers are familiar with your terms, use multiple sources for initial credit checks, call business references;
Collections – Be sure that any account past terms has been forwarded to a 3rd party collection agency or an attorney.
Early Pay Discounts
Sales discounts to encourage early payment can improve the cash flow of a business. This discount should be enough to encourage the customer to pay with the desired time, but small enough to avoid profit erosion. As with all promotions, early pay discounts should have a definitive end date as to when the promotion ends.
3rd Party Collection Agency
It is a good practice to have a definitive age when past due accounts are placed with a 3rd party collection agency. Generally it is recommended to turn over delinquent accounts after 90 days. At this point the debt is still fresh on your customer’s mind and will facilitate making you a priority. Along with have a psychological advantage, your collection agency will have tools, technology and contacts that can be used in order to have the account current quickly. Debt collection firms usually have programs in place to assist you in your internal receivables department. Other services include, demand letters, private investigators, commercial credit reports and access to legal records and information.