Are your clients delinquent?
- Do your clients ignore payment reminders, calls, and re-sent invoices?
- Give insufficient contact information?
- If tracking down customers who owe you money can be an incredible strain on your company which is time-consuming and very costly.
When is a good time to hire a collection agency?
Most companies send accounts to a collection agency when they are between 90 and 120 days past due. If you wait longer than that, you’re far less likely to recover the debt. The more time that passes, the lower the chances. Generally, it’s time to start thinking about hiring a collection agency if:
- New customers do not respond to your first attempt to collect the debt. When you do not have a history of transactions with the customer, there’s a greater chance they will refuse to pay or never intended to.
- You’ve agreed to a payment plan, but the customer does not follow through. Customers who still won’t pay after you’ve agreed to meet them halfway with a payment plan are unlikely to change their minds.
- A customer completely denies responsibility for the debt. Without a collection agency, these debts are rarely recovered.
- The customer makes unfounded complaints about your business, product or service as an excuse not to pay. Most of the time, these complaints are just an excuse to get out of paying the debt.
- The customer is going through a serious personal situation such as a divorce. Often, one spouse blames the other for the debt. A collection agency will be able to get to the bottom of who’s responsible.
If any of these apply to your past-due client accounts and it may be time to hire a collection agency. We are here for you!
Bayou State Financial Services may have the answer you’re looking for. A recent study by the American Collectors Association (ACA) shows that internal collection efforts lose over 76% of their effectiveness after the 60th day. By entering the process earlier in the A/R timeline, our company can provide billing services or a diplomatic 30-45 day “pre-collection” program that could reduce the cost for your business by allowing your team to focus on the accounts earlier in the receivable cycle, which could get a quicker response. This results in fewer accounts moving into the collection phase, lowering the cost of your overall collection efforts. Once they would move into collections our highly-trained staff with many years of experience will work to recover as much as possible that is owed to you. We will offer credit counseling and assistance to getting some cases outside help with their bills.
Many companies hold off on turning accounts over to a collection agency to recover past-due accounts because the cost is so high. The first option is to have your internal resources try to recover aging accounts. At the same time, new incoming aging accounts also need to be addressed. This stretches your internal resources and dilutes the efforts of your staff.
In most cases, the last resort is hiring a collection agency to work on a contingency basis that charges a 25% to 50% commission. You may feel as though you lose control of your customer relationships and there is a higher potential of losing your client to a competitor. We encourage that you let the debtor pay the collection fees and BSFS will work to keep your client in good standing for reoccurring business with you.