Making Sure Your Business Collects When Times Are Tough

Tweak Your Biz » Sales » Making Sure Your Business Collects When Times Are Tough

Making Sure Your Business Collects When Times Are Tough

by davethomas on August 15th, 2011
26 Comments

With many small businesses fighting to keep their heads above waters in today’s trying economy, paying the bills takes on added importance.

For those companies who are having trouble collecting payments from clients, the option often turns to hiring a collection agency. But how do you go about hiring the right agency, an agency that will in turn have your best interests at heart?

The simple goal of a collection agency is to locate the debtor and acquire the payment while abiding by the Fair Debt Collection Practices Act. In return for the service, the business compensates the agency for recovering the payment, with the quicker the action the better chance of receiving a payment from the debtor.

In the event your small business is in need of debt collection, there are several keys to follow:

Look for a collection agency that has a focus on small businesses, along with one that has a track record of success. Getting referrals from similar businesses who have used such agencies never hurts;
Look for a number of quotes before you settle on an agency, as fees can differ to a great degree. That being said, don’t take the cheapest quote just to save money, as you may end up with less than stellar service;
Look for an agency that has a good reputation and not one known for harassing consumers. As it stands, federal rules regarding obtaining money from consumers has been tightened in recent years. You do not want to work with an agency that has run afoul of the rules and regulations and could drag you into a court mess. Be sure the agency meets all state licensing and/or bonding requirements.

In the event you’re wavering on whether or not you need a collection agency, determine if you have done all you could to obtain a payment from a customer.

Among the things to review are:

Have we sent the correct amount of statements and reminders to the customer to handle the matter?
Have we returned any phone calls or correspondence the customer initiated?
Have we had an issue with this customer in the past? If not, why may it be happening now? If so, what was done to rectify the issue before?
Have we thought about what might happen to the current business we have with a customer if a collection agency gets involved? Perhaps we will lose that customer and his or her business for good?

Over time, your company cannot afford to have customers skipping out on their bills, due to the simple fact that your bottom line revenue is seriously impacted. By using a qualified and trusted debt collection service, you remove the burden of having to go after customers for payment, leaving it in the hands of the professionals.

When doing so, however, be sure to take your time and find the right agency that will make it its business to work for you, not the other way around.

Photo credit: trentweston.com

Category: Processes, Sales professionals

Tags: agency, bad debt, collection, collection agency, collections agency, credit control, customers, debt collecting, debt collection agencies, debt management, payments

The Author: davethomas

With 23 years of experience as a writer, Dave covers a wide array of financial topics, including discussing SafeAuto and its auto insurance offerings, along with internet reputation management and payroll companies.

Add Your Comment

http://blog.myprojecttracker.com Barney Austen

What a detailed post Jackie . You are absolutely right though – it is vital to follow a good solid process of research and selection or you will regret it in the long run (if things go bad). This happened to me once when I was under huge pressure to hire so I rushed the job and brought in the “wrong” person for the role. Between extra training, disciplinary processes etc, it cost far more than it would have done if I’d spent a bit more time on looking for the right person in the first place!
http://www.consultingexcellence.ie Jackie Prendergast

You have hit the nail on the head Barney – it really does cost a lot of time and effort if you get it wrong. Far better to but a little extra time in up front! BTW – is it too detailed?
http://www.consultingexcellence.ie Jackie Prendergast

Fred, thanks for your comments – and yes you are right – one of the biggest mistakes people make is making an offer (and having it accepted) before they do the medical and reference checks. It is a logical process really – it just needs to be implemented properly.
http://blog.myprojecttracker.com Barney Austen

Hi Jackie – that would be a no. The subject needs the detail.
Anonymous

Great post, Jackie. Very thorough. I could think of some good ones myself, but I’d be intrigued to know some of the questions you have identified that you should not ask at interviews.

:0)
http://www.channelship.ie/blog facundo

I am sure more than one reading will pick a good few procedures from this post Jackie. I was thinking about the point tou made of relying on your network to find candidates. It can sometimes be tricky so I think steps 1 to 3 have to be very present not to make mistakes in the name of “referrals”.
http://www.consultingexcellence.ie Jackie Prendergast

Thanks Lewis. Well for the most part I was talking about questions that could be considered discriminatory within a particular jurisdiction. In Ireland there are nine grounds on which you may not discriminate and therefore generally should not ask questions. For example, asking about child rearing responsibilities and flexibility to travel could be considered discriminatory. Of course there are exceptions to this. It depends a lot on the nature of the job and how and to whom you ask the questions (some questions are acceptable once asked of both men and women, others are never acceptable).

There are of course other question which I just consider a waste of time at an interview – but that is probably a discussion for another time.
http://www.consultingexcellence.ie Jackie Prendergast

You are right Facundo – there is definitely a danger of taking an employee through referral because someone else tells you they were good at another job. Not much good if you haven’t taken the time to understand what you want and need for the job and your business – they might be the right person….just not for you!!
http://www.consultingexcellence.ie Jackie Prendergast

Thanks for that….just checking!!
Anonymous

Thanks again Jackie. You really know your stuff, don’t you!

It’s posts like this that make me think: “now I know a good person in this field, and I am happy to pass their name on.”
http://www.btbtraining.com/blog Niall Devitt

Hi Jackie, Disqus ate my original comment Firstly, can I say as someone who has just helped a client hire for a key role – this is a comprehensive and brilliant step by step guide to hiring. I would like to comment on two of your stages.

Step 3 Write a job description: this is an area where many get it wrong by either entrusting the wrong person to write the spec or/and using the wrong language or description. I think people underestimate how important getting this right is, as it is key to attracting the right people to apply for the role in the first instance.

Step 4 Decide on your selection process and criteria : I like to use a weighed scoring system for interviewing as it negates the possibility of doing personality based interviews.

This is a truly thorough guide to best practice, minimising risk and cost and ultimately getting the right person for the role. Recruitment is a key key task for businesses, many would do well to read and then re-read your post. Thanks so much for sharing.
http://www.consultingexcellence.ie Jackie Prendergast

Must have done the same with Fred’s earlier comment – I could see it on my email but not here. Anyhow thanks for the very positive comments. With regard to weighted scoring – it depends on the criteria and the relative importance of each – sometimes they will be equal and sometimes not. Personally I believe very strongly in competency based interviewing which removes a lot of the danger around personal biases and “personality” based interviews. Notwithstanding that I wouldn’t like people to get the impression that it is all about the skills – personal traits are important particularly when considering team and organisational fit. The biggest pitfall though is that people regularly believe that hiring people like themselves will work. But it is a bit like that old adage “two many cooks spoil the broth”!!
http://www.consultingexcellence.ie Jackie Prendergast

Thanks for that Lewis…always nice to be appreciated!
http://twitter.com/MiriamAhern Miriam Ahern

Hi Jackie. Excellent post as always. Just to reinforce one of your points. I’ve known many employers to offer positions subject to either medical exam, reference checking or both. It’s a common mistake. Applying these provisos to your final selected candidate can get the employer into very hot water – even if the candidate doesn’t know at the time. Don’t forget about freedom of information – they can check what you are holding about them on file. Jackie, you are absolutely right to advise prospective employers to do these checks before a job offer is made.
http://www.consultingexcellence.ie Jackie Prendergast

You are right Miriam – adding it as a proviso isn’t ideal – although it is better to do that than not carry out any medical or reference check at all. And you are correct the Data Protection legislation (Freedom of Information relates primarily to public sector / publicly funded organisations – a full list is included in the amended act) does give entitlements in terms of personal information being held. It is always advisable to make it clear up front that both are a part of the selection process and that by applying a person is giving his/her consent (or this agreement can be got when you look for referees). It isn’t advisable to conduct checks without the candidate’s agreement.
http://twitter.com/JLNickAssociate Beth Zimmer

Great article, Jackie! I’d like to add that the assessments can really add value to the process. We work with our clients to build a behavioral benchmark for the position before we even go to market. That way, when they’ve chosen their finalist(s), we can compare their assessment results against the “benchmark”, along with all of the other criteria. If they don’t match in all aspects, we know where to delve deeper in our lines of questioning!
http://croatiahotels.in/forumdisplay.php?f=80 rjeka hotels

i liked the article …,
http://www.tweakyourbiz.com Niall Devitt

Hi Dave,u00a0because hiring a collections agency isu00a0not something you are going to have do very often, I likeu00a0your advice around seeking referrals – seems to me to be the first placeu00a0you shouldu00a0look.
http://www.smartsolutions.ie/blog/ Elaine Rogers

One very important aspect for small businesses is ~ “If you do not ask, you might not get” Certainly it is not a given, that when you bill a client with “30 days Credit” stamped on the invoice, that the money just magically appears in your bank account in 31 days.nnSmall businesses must be VERY pro-active in getting paid, ever before they consider hiring in the heavies, but once every channel has been used, it is imperative to hire the right people – thanks for sharing some great tips there Dave.
Dave Thomas

Elaine,nYou note some good points. I think given the state of the economy, more consumers are compiling lists of what most needs their attention, i.e. rent/food/car payments…. I would think this is a good time for collection agencies to be drumming up business….
http://twitter.com/xcelbusiness Helen Cousins

Some good points there Elaine – a nice addition to the post. Thank you,
~ Helen
http://twitter.com/xcelbusiness Helen Cousins

The voice of experience speaks volumes! Thanks for adding to the post Mary.
http://www.facebook.com/profile.php?id=622376023 Jennifer Dunn Escalona

Great tips! To avoid the “big box” approach (and the huge invoice from my accountant that goes with it) I use Outright.com in conjunction with Shoeboxed. Outright pulls all my info in from my bank accounts (full disclosure: I work with them) while Shoeboxed (which I don’t work with but love, love, love) is a real paperwork saver. They send you a big blue envelope every month that allows you to send in your receipts by mail. They then digitize your receipts and export them into your Outright account so your expenses are accounted for and anybody who needs to see your receipts can log in and see them digitally. It works wonders for eliminating the shoe box, hence the name!
Barjesh Syal

thanks. it helped me a lot
jagsad

blah blah blah
Dave Grundy

Congratulations Jackie – a common sense, easy to follow guide for every leader, manager to work to. This gives everyone a fair chance to make an informed decision that works for everyone. After all, the candidate is choosing the organisation too.

Bloggertone

Tweak Your Biz » Sales » Making Sure Your Business Collects When Times Are Tough