ALTERNATIVES TO USING A COLLECTIONS AGENCY

ALTERNATIVES TO USING A COLLECTIONS AGENCY

Using a collection’s agency for your difficulties in collecting on time can be a costly option right off the bat. A collection agency is going to cost you money simply to collect on those accounts that failed to pay you for the work you already did. No matter what, that collection agency is going to take a cut of your profits.

Using a collections agency to collect on your past due invoices should always be your last resort. Before turning to a collections agency, try using the following steps.

ASSESS YOUR COLLECTIONS PROCESS

If you’re struggling to collect on a significant number of accounts, enough that you are considering using a collections agency to aid in your process, then it might be time to go back and look at your current collections process. You may be missing some crucial steps that could help you to collect on the invoice without help from a third party.

SEND INVOICES ON TIME

Are you sending your invoices on time or are they getting to the customer late? If you’re sending the invoices out a week late and you have a 2 week time period to pay them, then you’re not giving your customers the time they need in order to pay the invoice. If you want your customers to pay on time, you need to get them their invoices on time.

INCLUDE ALL NECESSARY INFORMATION

Take a look at your invoices and make sure they contain all the necessary information, and that the information is clear. Is the due date clearly marked on the invoice? Is the information on how to pay, such as where to send checks or how to pay online clearly indicated? If the customer requires supporting documents, such as a purchase order or statement of work, are those included with the invoice? Some companies cannot make a payment until those supporting documents are included with the invoice.

SEND FOLLOW UPS

If you have not heard from the customer since sending out the invoice, make sure you are following up with them. It could be as simple as the customer forgot. Initial follow ups can be made via email, sending a reminder to make a payment as the due date gets closer. Once the due date goes past, follow-ups should be made via phone call.

USE DEBT COLLECTION SOFTWARE

Debt collection software allows your company to do more and reach more people without adding anyone additional to your staff. Follow-up emails can be sent out automatically without the collector having to lift a finger. Follow-up phone calls can be recorded and transcribed for your record, especially if you eventually need to take the case to court. Every day when logged into the system, collectors can simply run through a queue of assigned accounts, knowing exactly who to call and when. Difficult accounts can automatically be alerted and assigned to a senior accounts receivable representative. Finally, alerts can be made based on a customer’s potential credit risk – weeding out bad customers before their invoices go unpaid.

A GUIDE TO USING AND CHOOSING COLLECTION AGENCIES

So what will a collection agency really cost you?
Read our guide to find out.

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