February 6, 2015

How To Prevent Debt Collection

So here is the situation, you extended credit to a new customer for a large amount.  You were excited to have the business, as any business would be, but you did not perform the due diligence.  Everything seemed to line up, they had a website and looked like a good company.  Now 30 to 60 days later, they have not payed and you are out the merchandise.  Sound familiar?  It is not a fun situation, but how do we rewind and prevent this mess from ever happening.

The first step in the whole equation is to perform some research on the company or individual.  There are many online credit reporting services that will perform a search.  This search will bring up any red flags.  These can be the signs that prevent you from getting yourself into a debt collection nightmare.  Some of these signs include: court judgments or summons, credit inquiries, and written off accounts.  These red flags should be forewarning that no credit should be extended to this customer.  If you are dealing with a troubled customer, then require them to pay cash or go elsewhere.  This may keep you from making a couple of sales, but will be well worth it in the long run.

I have known many customers who were doing good business with a customer for years and all of a sudden this trusted customer was unable to pay.  A big problem with this is that over time the amount of credit that is issued to a customer gets larger and larger.  If you have a good relationship with another business, then you will be more likely to extend larger terms of credit.  So how do you prevent this from becoming a trouble spot for your business?  It may seem like this is tough to prevent, but there are some key warning signs that can foreshadow impending financial trouble.

Some signs to look for with current customers are the payments coming in regularly?  If they are sliding from 30 days to 45 and so on, then this should be a red flag.  Then you need to tighten the terms of credit to protect yourself.  Is the company not paying in full?  If they are only making partial payments, then you need to be cautious.  Look for any changes in their payments, whether timing or size, because this can predict financial troubles.

Be on the look out for trouble spots before you make a sale and afterward.  Forewarned is forearmed.

April 25, 2014

Business Debt Collection

Business Debt Collection Training Tips

Part 4 of the business debt collection training tips.  Here are more valuable tips for you to watch and learn.  Enjoy and good luck collecting.

April 23, 2014

Business Debt Collection

Business Debt Collection Training Tips

Part 2 of the business debt collection training tips.  Here are more valuable tips for you to watch and learn.  Enjoy and good luck collecting.

April 18, 2014

What to look for in a Debt Collection Agency?

There are many debt collection agencies in the world, so how do you know which is the best for your company to use?  Know that choosing the right agency is extremely important, because there are many collection agencies who use “strong arm tactics,” which will ruin your relationship with the customer.  There are also many collection firms who are not professional operations.  This not only means you have a smaller chance of collecting the debt, but also that any collection agency you hire afterward will have an even harder time collecting the bad debt.

Know that most debtors are good at what they do, and that is deceiving businesses and never paying their debts.  This is a bad things for all sides, even the debtor.  You need to choose a collection firm that is professional and knows the tricks that debtors use.  These tricks are hard to deal with if you are just stepping into the industry, but if you use a seasoned collection agency that is well versed in debtor tactics, you will have a better chance collecting your accounts receivables.

There are many collection agencies who use the letter writing tactic, which is not a bad tactic in and of itself.  The problem is when a collection agency uses this tactic solely without the complement of other more direct approaches.  We all know what we do with junk mail, paper and electronic, and a collections notice is nothing but junk mail to a debtor.  You are most likely not the only one trying to collect from the debtor.  So you must select an agency that will be proactive and persistent with your debts.  A debt agency that is willing and committed to your company is the first sign of a good company.  There are too many debt collection agencies who will disappear once they either collect or don’t collect your debt.

Look for a collection agency that is good at dealing with you, because they will deal with your delinquent accounts in a similar way.  Good luck with your debt collection agency search!

April 17, 2014

Why your Business should use a Collection Agency to reclaim its Debt

Filed under: business debt,collection agency — Tags: business debt, collection agency, collections, debt, debt collection — Peter Pinette @ 12:08 pm

What is a collection agency?  A collection agency is a business whose sole purpose is to reclaim debts that are owed to individuals or businesses.  This is the sole purpose of a debt collection agency and they have to be good at what they do, or else they will go out of business.

Why should you use a debt collection agency to get your bad debts paid?  Well, if you are like most people, 24 hours are not enough to get your work done.  On top of this, you would have to learn an entirely new skill, which takes more time.  It may sound good to try and get the money back that is owed to you, and this may work on a couple of instances, but on a whole collection agencies can save you a low of time, money, and headaches in the long run.  Many businesses use consultants and a debt collection agency is a consultant in a general sense.  You are outsourcing a part of your business to the collection agency, because they are better at it and they end up saving you money in the long run.  The industry that they work in is a hard industry and if they are in business, then they have successfully graduated from the school of hard knocks.

Collection firms will have a higher percentage collecting your bad debts than you will.  This is just like saying that a professional athlete will be better at their given sport.  If you practice a skill or trait day in and day out, you are going to be more capable than the average person.  This is another reason to turn your accounts receivables over to a collection firm.

Running a profitable business is a difficult undertaking, and it can be even more challenging when your customers do not pay you.  Do what you can to collect the bad account, but before you spend too much time and energy, turn the file over for collection.  You will be glad you did.

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