Author Archives Marilyn Miller

Eight Signs it is Time to Hire a Collection Agency

Posted by Marilyn Miller on March 26, 2020  /   Posted in Uncategorized

You have a growing small business, are “doing everything right”. You use customer contracts and have a good plan to recover bad debt in-house. When do you need to hire a collection agency?

Here are 8 signs it is time to get some outside help:
  1. You have a growing number of receivables over 90 days past due.
  2. You are spending too much time chasing non-paying customers and you do not have enough time for sales and customer service.
  3. You are having trouble paying your creditors because you are owed so much money.
  4. You do not have the cash flow to hire new employees or buy new equipment.
  5. Customers you have been billing move and you have no way to find a new address or contact information for them.
  6. You and your staff do not wish to be involved with customer disputes over payment.
  7. You have been going to small claims court and getting judgments, but are still not getting paid.
  8. Your accountant tells you that you cannot get a tax benefit from writing off your bad debt.

When small business owners to not get paid, it hits the community and people in the community immediately. Small business owners usually pay themselves last, and if they do not have the cash flow, they work for nothing. Heck – even President Trump has been accused of non-payment to small businesses.

Hiring a collection agency can save you time and put cash back into your business.

Debt collection agencies have resources to research and find people and their assets. They are expert negotiators who know how to handle disputes. They can set up effective payment plans and make sure people pay when they say they will. If you have obtained court judgments that you cannot collect, a collection agency knows how to attach assets, and execute court judgments using liens.

Hiring a debt collection agency may be the best business decision you make this year!

Five Credit and Collections Actions You Can Take in a Tough Economy

Posted by Marilyn Miller on March 24, 2020  /   Posted in Uncategorized

Is your business closed or pared down due to the COVID-19 crisis? If so, I am so sorry, and I hope you are back to full functioning soon. Even if you have no business today, you can plan for tomorrow’s business.  So, here are five things you can do now to help your credit and collections activities in the future. 

One: Contact customers who owe you money. 

There is nothing wrong with continuing to ask people to pay what they owe you, even in a recession. People will still pay you. They may pay less or they may pay you a bit later. Listen carefully and be understanding, but communicating with your customers is more important now than ever. 

The squeaky wheel gets the grease. If they owe you money, they probably owe others too. Your conversations do not have to be difficult. It will be reassuring to them that you are still in business and are working to make sure you will stay in business. You may have little chance of getting paid right now, but if you have no chance if you do not ask. 

Two: Review your accounts receivable. Create or review your accounts receivable management program. 

If you do not have a program for regular review and management of your accounts receivable, now is the perfect time to put a plan in place. Your first step is to create an aging report to give you a quick view of who owes you money, and how long they have owed it to you. You can use Quickbooks or even Excel to create an aging report. 

Set up a program to review your receivables regularly and a plan to follow up at each stage of aging. If you already have a plan in place, how can you improve it?

Three: Be willing to revise current payment plans.

If a customer has been making payments to you and tells you they cannot meet their obligation, give them a little breathing room. Offer to temporarily suspend payments or offer smaller payments for a given period of time. Remember that even if someone has owed you money for years, they have to pay you with today’s dollars. It is better to take a little less and perhaps keep a customer for better times than be hard-nosed and get nothing. As always, document all payment plans.

Four: Compose or improve upon your customer contracts. 

A customer contract that clearly outlines your expectations for payment and the consequences for non-payment will be your best friend. If you are extending credit of any kind, you must have a written contract. 

A contract can assist you resolve customer disputes. It can also lower the cost to you if you end up referring a customer for outside collections. 

Five: Hire a collection agency.

Just as it is not wrong to collect money owed to you during a recession, neither is it wrong to hire a collection agency to collect it on your behalf. Make sure the agency agrees with your approach to dealing with delinquent customers because you do not want to burn any customer bridges. 

Be realistic in your expectations with a collection agency. They cannot change the economic situation of the people who owe you money.  They are, however skilled negotiators and can set the stage for maximum recovery, now or in the future. 

One of my favorite albums is George Harrison’s All This Must Pass. George knew what he was saying:

Now the darkness only stays the night-time
In the morning it will fade away
Daylight is good at arriving at the right time
It’s not always going to be this grey

 Spring came without fail this week. Better times will as well.   We are all in this together. 


Recession Blues: How to Work with Customers Who Owe You Money

Posted by Marilyn Miller on March 19, 2020  /   Posted in Uncategorized

Although a recession has not been officially declared, most agree that we are on our way. Almost immediately, unemployment claims have shot up and the stock market – well, you know.

Times like these are scary, but even if your business is officially closed, it does not mean that you should managing your accounts receivables. Now more than ever is a good time to communicate with customers who owe you money.

Of course, a hard-nosed “pay or else” approach will get you nowhere – now or at any time.  However if you reach out to customers and speak with them, you may find that some are willing to pay you. Perhaps you will have to wait a little longer, or perhaps you need to offer a discount or a payment plan

Remember that even if the money has been owed to you for months, or even years, your customer would have to pay you with today’s dollars.

So, listen. If your customer is unemployed, or if a business, one that is shuttered, you have a decision to make. Do you want to take a long term view, and try to wait for better days? Perhaps your customer will be willing to give you a smaller, good faith payment now, with a promise to pay the balance later. In better times, you can tie that payment into new business.

Focus on long time, loyal customers. We are finding that although people are scared, they still want to pay something.  You may find that people value your product or service enough to work something out with you. 

With newer customers, be more careful about offering new lines of credit. Gather what information you can about them and get the best credit decision you can. If you do decide to grant credit terms, take a deposit. People with some skin in the game are more likely to stick to the terms of the deal. 

As always, credit terms should be in a written contract signed by both parties. 

The important thing is to keep the lines of communication open. 

All things must pass. Better days are ahead.

Stay safe.




Recession or No?

Posted by Marilyn Miller on March 17, 2020  /   Posted in Uncategorized

Extending credit to customers during a recession is tricky. Continuing to give customer credit will give you a competitive advantage and hope grow your sales, but you must be careful.

My 96-year old father is a WWII navy veteran. He describes the scariest moment in his life as the time his ship was tossed in a typhoon at sea. In the South Pacific, typhoons are sudden, fierce and dangerous. Sailors are taught that if they are caught in a storm and have no other choice, they must employ “steering way”, meaning they must ride straight through but with enough power to keep from being tossed by the waves. The idea is to keep a strong and steady pace into the wind, and avoid being broadsided.

Some economists believe a recession is imminent. Even President Trump has hinted that we are headed that way. It is likely not only a matter of “if”, but “when”, “how long” and “how deep”.

Granting customer credit is exactly like riding out a storm at sea. If you are going to do it, you have to plan for it. Are you prepared to continue extending customer credit in a recession?

First, know how your customers pay. Not all customers deserve credit but many will. Some of your best paying customers might find many of their credit lines constricted. If a customer has a good payment history with you, take a leap of faith with them and continue to extend credit. For customers that pay a little more slowly, consider a payment plan with an upfront deposit.

Of course, as you navigate your way through customer credit in a tough economy, you must continuously monitor the situation. Stay on top of your receivables. If a customer goes past due, get on top of the situation immediately. Reach out to the customer and see what is going on. 

Tough times make communications with your customers even more important. 

Have a plan, stay safe, stay the course and full speed ahead!

Demystifying Accounts Receivable Management

Posted by Marilyn Miller on March 11, 2020  /   Posted in Uncategorized

The management of accounts receivable must be as important a process as sales, marketing or any business function. Unfortunately, AR management is too often pushed to the side. Small business owners get too busy growing and running the business, and do not pay attention to AR until they are buried with a pile of aging accounts. 

Before long, cash flow is tight, and the business has trouble meeting its obligations. At this point, we are usually brought in to help, and we are happy to do so. We can recover some of the delinquent accounts and return some money to the business.

However, if a business commits to a regular program to manage and monitor accounts receivable, the results to the bottom line can be extraordinary. 

So, you have committed to an accounts receivable management program. What does it look like?

Your first step is to make smart credit decisions. Get to know your customers. Not every customer deserves credit from you, and not every customer to whom you extend credit should get the same terms. Do as much as you can to gather as much information as you can on a new customer, including credit references, and verify them.

Once you have decided to extend credit to a customer, document your arrangement with a customer contract. It is nice to think that you can do business on a handshake, and sometimes you can, but why take the chance? Many of the files that land on my desk as delinquent desks are undocumented “handshake” deals. An oral contract is often accepted in a Court of Law, but an oral contract leaves open the opportunity for a customer to remember your oral arrangement differently, and remember it differently they will as soon as there is a payment dispute or delinquency.

No time to prepare a formal contract? Send a simple email confirming basic details including when and how you expect to be paid, and what will happen if you are not paid on time. Remember though that a contract must be bilateral, so make sure that your customer confirms that they agree. Once they agree, you have a simple contract, which is certainly better than nothing at all.

Lastly, develop and commit to a process to monitor and track your your receivables. You (or a staff member you trust) should be intimate with what you have outstanding at 30, 60, 90 and over 90 days and have a plan of what to do at each stage of aging. Get on the phone and speak with your customers. Send a well worded collection letter. Hire a collection agency. Use the court system. In short, take action!

Accounts receivables management, if properly executed, will impact every aspect of your business. You will have more time, more sales, better cash flow. On the other hand, if you do not manage your receivables, they will end up managing you.



Debt Collection and Customer Retention: You CAN Have Both

Posted by Marilyn Miller on March 10, 2020  /   Posted in Uncategorized

Debt collection and customer retention are not mutually exclusive. It is possible to manage delinquent customers if you have a consistent plan. Small business owners work really hard to gain new business. Every new relationship begins with the expectation of payment, so when payment is not received, it feels like betrayal. How do you juggle your need to be paid with the need to grow your business and retain customers? Is there a way to collect money owed to you and protect, even salvage your client relationship?

Sure there is. You must commit to a consistent plan:

  • Start every relationship off the right way with a good contract that outlines all payment terms and the consequences of non-payment. Customer contract do not come from lack of trust. Putting the details of your business relationship in writing, and having both parties agree is NOT a negative way to begin a business relationship. In fact, it is a great way to make sure all parties are on the same page from the start. Great relationships begin with great communication.
  • Know your customers and how they pay. Do not give the same terms to all credit customers. You may give your largest or most promising clients more credit than others. With other customers who may be slow payers, ask for a down payment before extending credit.
  • Every month, review your accounts receivables and follow up with them diligently. Polite reminder phone calls and well crafted collection letters can work wonders.
  • Perform “triage” on all customers over 90 days past due. Make two piles: customers you are willing to ride it out with a little longer and those that need to be sent immediately for outside collection. There is a big difference between a client who responds to your calls and asks for a little more time and a customer who totally ignores you or flat out refuses to pay. Decide which customers you wish to keep and wish you no longer wish to have as customers.
  • Make them an offer they cannot refuse! Find creative ways to offer new product if the old balance is paid in full. For example, if your customer owes you for three months, offer 3 additional months at a discounted cost if the original 3 months are paid in full. Consider a small discount of say, 10% for payment in full. A small discount will be less you will pay a collection agency, and might just do the job. However, make sure you communicate in writing that your offer is only available for a limited time, and will be withdrawn on a certain date.
  • For customers you wish to send for outside debt collection, decide which customers (if any) you would take back once their bill is satisfied. Let your collection agency know as they may be able to use the information to get the bill paid. We strongly recommend not providing new services to accounts that have been sent for outside collection until balances are paid in full.

In the end, it all comes down to communication with your customers and a consistent plan for tracking the money owed to you. Good customers will appreciate your discipline and fairness, and those who do not work with you may not be worth your time for the long term.

Just One More Letter

Posted by Marilyn Miller on March 06, 2020  /   Posted in Uncategorized

I received a call yesterday from a new business prospect – a medical practice that has experienced rapid growth. They have realized “all of a sudden” a bad debt load of nearly $500,000 and have decided it is time to hire a collection agency. 

Much of the bad debt they are holding is well aged, at least over a year old. They have sent numerous statements and have tried to reach delinquent patients by phone. Nothing has worked to get these patients to pay, or even to get them onto a payment plan. 

They hired me, but now have decided to send “just one more letter” before turning files over to us. So, in effect, they are going to do one more time the same thing that has not worked month after month.

Why do small business owners wait to turn accounts over to a collection agency? Is is the cost?

The cost of collection to a business is certainly a factor. Doctors agree to take patients with the understanding that once insurance is billed, the patient will pay any costs not covered by insurance. So, when patients do not pay and they have to hire a collection agency, it means that the doctor receives only partial payment since the collection agency takes a percentage of the amount collected.

In reality, a receivable is not real money. It is only an obligation. If the patient does not meet their obligation by paying the bill, the doctor has zero. Zero times any percentage (collection agency fee) is still zero. 

Consider a patient account in collections as worthless. You have nothing. Your collection agency will attempt to recover as much as they can. So instead of focusing on how much you are going to lose, consider it lost, and then anything recovered is extra.

Also, if the cost of collections is an issue, there are many ways to reduce the cost, including a strong patient financial agreement.

Do physicians delay collections out of fear of consequences?

 Physicians may also fear some sort of retaliation if they refer a patient account to a collection agency.  They fear damage to their reputation, loss of business, or even a malpractice suit from patients in collections. 

I have never seen anything of the sort happen, and I have been collecting for physicians for years. Now, if you have a patient that is threatening you with a malpractice claim, that is not the account to send to collections. 

A doctor once told me that he did not want to gain the reputation of being the doctor who send his patients to collections. I congratulated him, and told him that he had accomplished his goal. He was officially the doctor no one paid, since they realized there was no consequences to not paying.

As to a patient who does not pay you putting a bad review online, do you really think someone is going to admit to the world that they owe money? And, if they do, how credible will their complaint be if it is based on non-payment? 

So, while a well-worded collection letter to your patients is a good idea, it should be done early, within the first 90 days. After that time, bring in a collection agency to help you so that you can focus on treating patients. 



Debt Collection Costs: How to Control Them

Posted by Marilyn Miller on March 02, 2020  /   Posted in Uncategorized

Debt collection costs – who doesn’t hate them? I get it. You don’t get paid and have to pay someone to get your money for you. It stinks.

On the other hand, bad debt sitting on your books doesn’t do anything for you and your business. You can’t use it to grow your business or pay your employees. You have to convert those receivables into cash and to do that, you have to recover bad debt. With bad debt, something really is better than nothing.

How do you control your costs of collection? The first step is your own consistent effort to stay on top of the aging of your receivables. You must have a plan and procedure in place and you must stick to it. The better you get at your own in-house collection, the more you can keep the costs of debt collection to a minimum.

Even with the best efforts, some bad debts need to be referred for outside collection. If you have not collected the money in 90 days, you have to consider hiring a collection agency. The number one factor that drives up collection agency fees is the aging of the debt. Collection agency fees are higher for older debts. You are not doing yourself any favors hanging on debts, hoping your customers will pay you. In addition to higher fees, there are some hidden “soft costs of delay” Get help!

Debt collection costs are about more than the rate a collection agency charges. Do you have a customer contract? If you do, you may be able to charge interest and/or recover some or all of your collection costs.

So, the top three things you can do to lower your debt collection costs are:

  1. Recover as much as you can in-house using smart and consistent procedure.
  2. Don’t hold on to the debt too long.
  3. Maximize your recovery by adding contractual language to include interest and costs of collection.

How do you manage your debt collection costs?

Small Business Debt Collection: Get it Right

Posted by Marilyn Miller on February 28, 2020  /   Posted in Uncategorized

Small business debt collection is too often and afterthought. In many small businesses, management, sales and customer service functions are not distinctively defined which could make it difficult to assign responsibilities and tasks. Sales is king, particularly in competitive fees, and new customers are often not assessed to determine if they ared creditworthy. Monitoring accounts receivable becomes too difficult, and “bean-counters” who advocate for caution are seen as the enemy of new business growth.  Small business owners often tell me they are simply “too busy” growing and managing their business to worry about customers not paying. Unfortunately, the inattention often becomes a crisis when cash flow suffers. In these cases, panic ensues and the business will pull back credit lines, which of course, makes them less competitive. New hires or investments in technology or equipment become more difficult.

How do you juggle your many hats to include small business debt collection?

Small business debt collection involves a commitment to a process. Small business owners must promote a culture that emphasizes smart credit risk management as much as it emphasizes new business growth. It is team effort involving management, sales and customer service.

Small business debt collection can be successful in a business of any size.

Entrepreneurs who “do it all” can and must commit to spending a block of time on making sure they are getting paid on time, and following up on delinquent customers. If you are lucky enough to have a staff, you must design a process to monitor your accounts receivable and empower one person in your organization to manage it.

If you are going to extend credit to customers, you must do it in a smart way. Think like a bank. Gather information on your customers and use it to make a sound credit decision.

Customer credit arrangements must be in writing, in the form of a customer contract. If you do not have time for complex contract, simply outline (in writing) the details of your arrangements – when you expect payment and what happens if payments are not made on time – in an email. Ask customer to email back their consent, and you have a simple contract.

Set your process to recover payments from delinquent customers. Use a collection letter as your first step and do not delay to hire a debt collection agency if you need to do so.

Small business debt collection does not have to complex. It merely needs to be a priority.

Credit Customers and Reasons They Do Not Pay

Posted by Marilyn Miller on February 22, 2020  /   Posted in Uncategorized

Small business customer credit allows you to increase sales and grow your business. However, business owners must be smart about extending credit. Not all customers deserve to receive the same credit terms. Credit agreements must be in writing. Your customer credit contracts are invaluable.

To put it simply, there are three  this condition that create delinquency.

People do not pay their bills due to poor credit practices on their part, poor credit practices on the creditors part, and catastrophic life events.

Customers who do not pay due to their own poor credit practices are the kinds of customer who do not care about the credit rating. They may be irresponsible, overwhelmed or simply believe they do not have to pay. These customers are typically the ones who are referred for collection. Depending on the specific reasons, they may agree to pay the debt in installments while others may have to referred for legal action.

Other customers do not pay due to creditor actions. Yes, I said that. People may not be paying based on something you did or do not do. If you do not send bills promptly or if your bills are difficult to understand, you may be giving a customer an excuse not to pay you. I recently received a medical bill from a pediatric practice. Since my kids are grown, I knew it was a mistake. I called the office and learned that the bill was valid, but that the practice billed everything under an affiliated pediatric group. How confusing!


Other times, small business customer credit goes awry when the creditor does tell the customer upfront what services will cost, and what will and will not be included. For example, a contractor should communicate the applicable hourly rate and minimum charge before going to do the job. A simple email confirming the details of price and service can serve as a simple contract.

Take time to put together a customer contract. Bill promptly. Make sure customers know how and when you want to be paid. Do not be afraid to pick up the phone to speak to customers as soon as they become delinquent.

Customers who do not pay based on catastrophic life events are often the most difficult for recovery. Today, the most common catastrophic life event is either the loss of a job, or an accident or illness that produces a large medical bill. Your best bet in this situation is to do your best to be patient and work to with customers to pay in installments. We set up payment plans all the time with who are out of work. Usually, we begin with small payments and reassess every few months, with the understanding that payments will increase if employment is secured. Some people may become too overwhelmed and declare bankruptcy which could mean you have to walk away. With patience and compassion, however, you will find that even when times are the toughest, many customers want to do the right thing.

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