We have stated it many times here on our blog that if you are running any type of business, you are going to have customers that are either late in paying their bills to you, or at some point, not paying you at all. In a perfect world, customer payments would come in on or before the due date, and no one would delay payments to you. But we all know, that’s not how things work.
It’s a pretty clear assumption that the more customers you have, the greater need your company will have when it comes to having a plan for those late and non-paying customers. In short, more customers equal more late payments. So as a nationwide collection agency that works with clients that have ongoing debt collection needs, we would like to offer a few tips for companies that require more attention when it comes to getting customers to pay.
When you are running a larger organization, you have to have a solid plan for getting your customers current in their financial obligations to you. That includes both the internal procedures and what happens next when you need some extra help in getting paid.
If you have a regular need to ask customers to get current, you’ll most likely have a regular need for a collection agency. Here are a few items to consider when you do require consistent efforts to get people to pay.
Check your accounting procedures first
You’ll want to make sure that your company’s internal procedures are helping and not hurting your cash flow. Your organization should look at the entire customer journey in terms of how they pay you. First, do you have all the proper contact information for your customers? Full name, address, phone numbers and emails are important pieces of info to have on file. The more data, the better.
Is your invoicing going out on time? You might think there’s an obvious answer to that but it might surprise you to find that many invoices do not go out when they should. Double check the timing of those invoices and make sure you have what you need to correctly invoice such as entering service calls on time and other billable activities. Also, set a regular interval that invoices go out. Weekly, monthly, etc…
Internal collection activity
What happens internally when a customer doesn’t pay on time? It is wise to go through what you currently do and take time to make any adjustments to those internal procedures to be more effective.
After 30 days of not receiving payment from a customer, we highly recommend sending a statement. If it is a regular monthly customer, then of course, make sure the past due amount is indicated clearly on that next invoice. If you do not hear from them promptly, a follow up phone call should be your next step.
When it comes to follow up collection calls, make sure you use tact and respect every time you contact that customer. Have your team understand that being nice is far better than being demanding. Training is vital in this area.
And a quick note about calling customers that have not paid. Make sure you are following the proper laws in your state. In many states now, there is a limit to the number of collection calls you can make in a given period of time so double check the laws in your area.
A collection agency for regular delinquencies
There comes a point when your organization needs to acquire regular support for those that do not pay. Either internal procedures are not totally effective, or your resources just don’t support the amount of time and energy it takes to track down late-paying customers. Hiring the right collection agency can make all the difference in your business.
One significant way in which a collection agency can speed up payments is the fact then when consumers are contacted by an agency, in most cases, it adds urgency to the situation. No one wants to be in collections and many customers will find a way to pay you something because they do not want damage their credit. It makes your bill a priority.
While many large companies do have credit and collection departments, you would have to be fairly large to support that type of operation. Having a third-party collection agency to support your regular collection efforts is a smart alternative and one that can save you countless resources.
Having a regular flow of delinquencies takes time to resolve and that may not be feasible in your organization. However, outsourcing your collections to a third party can save your team time, save your company money and also save you countless hours in making sure you are adhering to all regulations.
Another benefit to outsourcing to a nationwide collection agency is that customers can move away from your area and the ability to continue collection activity after they move is critical at times, to get them to complete their obligation to your company.
If your company has regular needs in collections, then you’ll want to know that your company is in good hands and that your customers, regardless of their payment history, will be treated fairly. Having an established relationship with a collection agency that knows your business and your industry and can become essentially part of your extended team, is a true benefit overall. That agency you choose represents your company every day and you want to know that you are in good hands.
If your company has continuing needs in the area of collections, contact our team today and schedule an information session with our experts right over the phone. Our specialty is representing your company with diplomacy and tact and you’ll see just how when we talk.