Author Archives Marilyn Miller

Debt Collectors: What to Do When They Call

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

I have been a debt collector for many years. My clients are not big banks or credit card companies. My clients are small business owners. When small business owners do not get paid, it impacts them immediately. They cannot pay their bills, or feed their family. I am passionate about the right of my customers to be paid, and I am proud to be their advocate.

My job is to walk the line between the creditor and the debtor: to negotiate and come to an arrangement that works for all parties, while all the time remembering that my number one goal is to get my client paid. Most people want to do the right thing, and they want to pay what they owe, but life gets in the way. Others may just need more information or have a valid dispute.

Every single one of my customers performed their service or delivered their product expecting to be paid for it. Just imagine if your boss told you at the start of the work day that you were not going to be paid. If you are unable to pay, speak to your creditor, and you can perhaps avoid having your file sent to a collection agency.

 If you are contacted by a debt collector, here is some advice.
  • You have the right to be treated fairly and respectfully. Consumer (business to consumer) debt collection is governed by the Fair Debt Collection Practices Act (FDCPA). Debt collectors must provide verification of the debt they are attempting to collect if you ask for it. They must not be abusive or deceptive. The FDCPA is a protection against abuse. Although some “Stop Debt Collector” ads may lead one to think otherwise, it is NOT a way to get out of paying a debt. Even if you successfully evade the debt collector, a valid debt does not go away unless it is out of statute or discharged in bankruptcy. Commercial (business to business) debt collection is not as highly regulated, but still commercial debt collectors cannot break the law.
  • While there are certainly bad players out there, there are also many good reputable collection agencies who recover money for businesses and help the economy. Each state has different license requirements. Check with your state, or do not be afraid to call your creditor to make sure the collection agency is on the level.
  • If the agency checks out, do not ignore them. If you do not wish to speak on the phone, respond in writing. Ignoring a debt does not make it go away.
  • A debt collector’s job is to get a debt paid. If you do not wish to pay the agency, pay the creditor directly, but let the agency know you have done it so that you get credit for the payment.
  • If a debt collector is calling your number and looking for someone else, contact them and let them know that they have the wrong number. People change phone numbers often these days. If you do not let the collection agency know, they have no way of knowing they have the wrong person.
  • Remember that the debt collector did not cause the debt and that they too, are in a tough spot. If you are treated with respect, be respectful in return, you may find you can reach a settlement with the least amount of stress.
  • Come up with a plan to pay off the debt, to the best of your ability, and communicate it. Be reasonable and do not over-commit. In the same vein,  suggest as much as you can so that you can get the debt paid as quickly as possible.

Collection Agency: Is Your Rate Really Competitive?

Posted by Marilyn Miller on May 05, 2020  /   Posted in Uncategorized

As the owner of a small business debt collection agency, I often get calls from prospective clients who are only interested in our rate and do not want any other information. It is frustrating to me because I believe that each client is different and the same rate should not always apply.

Like any business, a collection agency is started to make money. If your collection agency charges a rate that makes no profit, they will not be able to continue in business.

You get what you pay for.

A contingent debt collection rate means that no money is paid upfront and the agency is compensated with a percentage of monies recovered. Rates can vary based on many factors: the aging of the debt, volume of accounts placed, or size of the file placed. The contingency fee (i.e, no fee until money is collected) should support the amount of activity that will be needed to recover the money owed. While we all certainly want to manage the overall cost of collection, a low rate is not always what it appears to be.

Years ago a prospective client, a dentist, told us that he had over 200 delinquent patient accounts and had made an arrangement with an agency that gave him a very low rate. After 18 months, the agency had recovered only $1,200 for him and told him that in order to proceed to “Stage 2 Collections”, a high rate would be needed.  The low “teaser” rate did include credit reporting but little else. We took over the account and recovered thousands of dollars for him, a rate that made sense for us, and also gave him a much better return.

All contingency rates offered by collection agencies are not the same.

Some rates are all inclusive, while others provide very basic services and add charges for activities that are essential for successful recovery. So, the low rate is not really low at all.  For example, I once reviewed an collection agency agreement for a customer. His “low” rate did not apply to any file under $250.00 or any file that needed research (40-50% of collection files do). Legal fees were also not included in the rate.  The “great rate” applied to less than 30%  of his files. Never pay additional fees for research. It is part of what a debt collector does to get the job done, and should be included in the rate.

A contingent collection agency rate should require no upfront expense.

The collection agency is has an incentive to work hard to recover bad debt as they receive no compensation at all if unsuccessful. The contingency fee should be structured to include all services necessary to get the job done.

Do not assume that a contingent rate means that collection agency services are free.

One advantage to using a collection agency is the fact that a creditor does not have out of pocket expenses. If a collection agency fails to collect a debt, you should owe them nothing. However, your collection agency is taking a risk when they agree to collect for you. They believe that the debts you are submitting can be collected. You want a long term relationship with your agency, so handle it with care, and work with them to get the best results with your agency.

When I hear a potential client tell me they have many accounts for collection, but are only going to send me a few to “see how I do”, I immediately lose interest. I know that client is sending me the worst files, and that I am being set up to fail. There are only so many hours in a day, and choose to work only for serious clients.

There are many collection agencies to choose from, and finding an attractive contingent rate should be easy. If you are lucky to land a very low rate, watch to make sure you are getting the very best results from your collection agency. A low rate means nothing if the agency does not recover your money.

A Winning A/R Strategy: It Shouldn’t Take a Crisis

Posted by Marilyn Miller on April 30, 2020  /   Posted in Uncategorized

Last year, I helped a physician close his practice. He did not close because he could not attract patients. He did not close because he did not get results for his patients. He had a very large and loyal patient base who were devastated when he announced his closing.

The doctor closed his practice because he was losing money. He was losing money because no one was billing the balances after insurance.

He told me, “I was working so hard but not making any money. My “sales” numbers – new patients – looked great. I did not realize that we were not collecting money until it was too late.”

Another small medical practice was forced to close his practice due to an injury. When he met with a business broker to value his business, he was “shocked” to learn that he was owed $300,000. Much of the debt went back far beyond the legal statute of limitations, and was lost to him forever. He hired us and we recovered quite a bit for him, but it was a fraction of what he would have seen had he had an accounts receivable management program in place. 

Accounts receivable management is not rocket science.  You need only a plan and commitment to it.

The first thing you need is an aging report. An aging report shows how much you are owed, and how long you have been owed it. The aging report becomes your A/R map. Follow it. Live by it.


Devise a process to review monthly (at least!) and address each again receivable.

Put a team together and designate one person to  drive the process and make sure it stays on track. If you are an sole proprietor, it will all be on you, but if you are lucky to have a team to help you, use that help.

Decide the action you will take at each aging milestone.

For example, send a “friendly reminder” letter to customers who are 30 days past due. However, at 45 or 60 days, you need to escalate the process which could mean a less friendly letter or a phone call.

Determine your limits and stick to them.   

At some point around 90-120 days out, for  customers that ignore your efforts, another escalation – a Small Claims suit or referral to a collection agency is in order. Too many businesses send bills for months or years, and wonder why people are not paying them.

Do not wait for a crisis to force you to face an accounts receivable nightmare. Give accounts receivable management the same importance you give to sales, customer service, and any other part of you business.



Collection Agency: Love to Hate?

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

Google “collection agency”. You will see a ton of articles about what to do if you are contacted (“harassed”) by a collection agency, as well as advertisements from attorneys willing to prosecute your Fair Debt Collection Practices Act (FDCPA) claim against an agency.

Believe it or not, reputable collection agencies (and most are reputable) believe in the FDCPA and work hard to comply with the law. The advice I always give to small business owners looking to hire a collection agency is to ask about an FDCPA training program for their collectors – a must to make certain your customers will be treated with respect.

Don’t get me wrong, there are abuses. However, the debt collection industry is like any other, with good and bad players. The debt collection industry represents the largest source of complaints to the Consumer Financial Protection Bureau. However, there is some feeling that the methods of data collection used by CFPB might not accurately reflect consumer issues with debt collectors.

Of course, my industry may be unique in we are often resented by both our collection clients and the people who owe them money. Our clients see us as a necessary evil, and the resentment they feel about not being paid often transfers to the collection agency when they see a portion of their hard-earned money going to collection agency fees, truly adding insult in injury.

What are the other options?  Do it yourself? Sure, you should have a program in place to collect as much as you can in-house. A good consistent program will certainly cut down on the files you need to refer for outside collection. Hire an attorney? Yes, some cases can be settled by an attorney, but not all files are right for litigation, and there is are still costs associated?. Just ignore the delinquent accounts and take a tax write-off? Well, that rarely gives you much relief, if it helps at all.

Consider a recent study done by Fundbox that reported some $825 billion in unpaid invoices to small businesses in the US alone. The study conjectured that if all unpaid invoices were paid on time, small businesses across the country could hire 2.1 million new employees, thereby reducing unemployment by 27 percent – how is that for a jobs program?

Not getting paid by customers can also mean that you are unable to grow your business by physical expansion, purchase of equipment, sales and marketing. You may even have to raise your prices.

The collection industry’s trade Association, ACA International reported that in 2013, third party collection agencies returned nearly $50 billion to their customers.

Still hate us?

Making Adjustments to Your “Vision Board” in Response to Current Times

Posted by Marilyn Miller on April 25, 2020  /   Posted in Uncategorized
Before COVID-19 what did you have on your vision board for your business?  What adjustments have you made or need to make for post-COVID-19?

Anyone who has delved into any type of self-improvement whether it be for personal or business, may have been tasked with creating a “Vision Board” for what they want to see happen in their future.  As a business owner, maybe you didn’t physically create a vision board, but perhaps had a virtual Vision Board or at least an idea of one.

Fast forward to today and a you are now faced with creating a “Post COVID-19” vision board.  How to reopen your business, how to pick up where you left off, how to maintain your current clients and solicit new ones. How to deal with the economic challenges that face not only us, but our clients as well. 

Your vision board may now include a more flexible approach to the way your clients pay you.
  • Offer payments plans with a down payment or offer incentives for payment in full at the time of the service.  
  • You might consider extending credit to existing customers as long as you both agree and sign off on the terms. 
  •  Create clear, concise contracts outlining all costs including penalties for cancellations, late payment fees, cost of collection, etc.  Your vision board might also include cleaning up your accounts receivable, contacting your customers who are behind on payments, offer flexible re-payment plans, taking a look at some of your older accounts receivable and try to collect on those accounts.

Just envision “cleaning up” and “cleaning out” your accounts receivable.Take the time you have now to update your vision board to be reflective of the unforeseen circumstances that have been thrust upon us. 

 Now is the time to revamp your “vision” make the changes to your business operations that you may have thought about, include them in your vision for the day (and it is almost here) that we are “back to business as usual” well maybe not as usual, but the new usual!

A New Look at Small Business Payment Plans

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

In a time of economic uncertainty like the current Covid-19 crisis, small business owners need to be flexible and creative. The ability to provide payment terms to customers is a great way to be stay competitive, but it comes with a good deal of risk.

Payment plans are more important than ever and need to carefully constructed, monitored and documented.

The first rule of any payment plan is that it must be in writing and must be signed by the customer. The plan should detail exactly how and when payments are to be made, and elaborate any consequences if payments are not made as agreed.

Personally, I believe every payment plan should begin with a down payment, even a small one. Getting some “skin in the game” is a good thing. Presently, a customer may not have the ability to pay today, but you will not know that unless you ask.

A review of payment plans is part of your overall accounts receivable management process, and must be done monthly, at least. Even in the best of times, you may have to consider altering plans to accommodate seasonal changes or downturns in business. You should be the one making the calls on this though, not the customer. When you see payment plans getting off course, reach out to your customer immediately. Keep communicating. 

How are payment plans affected in a tough time? What can you do about it?

As you are monitoring your plans and reach out to delinquent customers, here are some adjustments to consider:

  • Method of payment – If your customers are used to paying you in person, they cannot do that if your office is closed. Even when we reopen, it is likely you will want to limit person-to-person contact. Ask your credit card processor for a mobile solution. Set up an payment portal on your website. Direct customers to call your office with credit card information. 
  • Amount of payment – If a customer is having trouble making payments, you can temporarily lower payment amounts. Make sure the change is agreed to in writing. 
  • Deferred payment – You may be in a position to allow customers to skip a month or two, and add the skipped payment to end of the payment term. Again, as always, get it in writing.
  • Offer payment of full balance – Not everyone is out of work or out of business. You may have customers who are doing well, and now is a great time to offer a payoff. Your can offer to waive interest or offer a small discount to pay the balance in a lump sum. It is very important to communicate these offers as “limited time only” opportunities. 

Each time you make contact with a customer who is experiencing trouble making payments, you have an opportunity to solidify your relationship. Customers who know you care about them and are willing to work with them will stick around. 



Stimulus, Schimulus

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

If you have already received your stimulus check, congratulations. Many people have not, and who knows how long it will take to arrive, and many people do not qualify to receive the funds. Similarly, if you waiting for the Small Business Administration to send you some relief, get in line.

What can you do if you do not qualify or cannot wait for relief?

If your business is still open, keep selling. Keep extending credit, but in a smart way.  

Stay on top of your accounts receivable. Make sure people know how to pay you. You may have to change the way you receive payments.

Revisit payment plans and see if they need to be amended. It’s better to get a little less than to get nothing. Give customers a little breathing room today as an investment in tomorrow’s sales.

As part of your accounts receivable management program, contact delinquent customers and speak with them. If they cannot pay you now, they will promise to pay at a later date. You will only know which customers are able to pay you if you ask. 



Customer Contracts: Planning for Recovery

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

I just listened to the New York Governor daily update on the Covid-19 situation in his state. I have listened to him often of late. I have a vested interest in New York, as my (healthy, thankfully) 96-year old father lives there.

Today, the governor spoke about how New York has come back stronger from tough times before, and that he hopes and believes that the same will happen after Covid-19. It got me thinking about how my business, and other small businesses can use this “down time” to ensure we come out stronger on the side of this ordeal.

One way to strengthen and protect a small business is with strong customer contracts.

The time to write or review your customer contracts is now. Relying on oral contracts or a “handshake deal” is not good practice. While oral contracts are valid, unless a deal is in writing, you leave yourself open in the event of a dispute.

Use this time to strengthen your business by making sure you have a good customer contract that is executed before a transaction. If you wait until after the transaction, as my mom used to say, you are “closing the barn after the cows have gotten out”. Good solution, but too late to be of any use.

How do customer contracts benefit your business?
They document all details of the customer relationship.

Imagine beginning a relationship with both parties clearly understanding how things are going to work. A customer contract is a road map to success.

They can often be very simple.

Not every customer contract has to be complicated. Often, a simple statement will do. For example, if you take new customer orders over the phone, confirm details of cost, expectations for payments and the consequences of non-payment in an email before providing your service. Ask customer to email back their agreement to your terms. You have a simple contract.

They help resolve customer disputes.

If you have a solid customer contract, you can use it to resolve customer disputes. For example, I have a customer who outlines, in detail, how a customer must cancel the contract. If a customer does not cancel correctly, additional charges apply.

Also, if you decide to litigate a customer dispute or non-payment, a customer contract will greatly increase your chances of success. You contract should also address the subject of arbitration, and how it may or may not be used to resolve disputes.

personal guarantee means that an owner of the business guarantees the debt if the company is unable to pay.

They can lower your costs of debt collection

If you wish to recover collection agency or attorney fees, you must include them in your customer contract and make sure customer agrees to them beforehand. The same holds true if you want to add finance charges or late fees. You cannot just add them onto your invoice after the fact.

They can be used to personally guarantee a business debt.

If your customer is a business, especially a new business or a business in distress, we recommend obtaining a personal guarantee.

Commit to the drafting, revision and regular use of customer contracts. Update them annually. Ask your attorney to draft a customer contract for your business for you today. It will not cost much, and it will be the best money you spend this year.

In other words, close the barn door before the cows get out, not after!





Accounts Receivable Management and Resiliency of Your Business

Posted by Marilyn Miller on April 16, 2020  /   Posted in Uncategorized

Every Thursday morning, I spend 90 minutes networking with a group of local professionals in my BNI Group. We spend time learning about each other, our businesses, and what types of referrals are best. During the COVID-19 crisis, we are meeting virtually. The theme of this week’s meeting was “resilience”, which is certainly a topic on the minds of us all.

Merriam Webster defines resiliency as an ability to recover from or adjust easily to misfortune or change. As small business owners we are constantly dealing with change, and how well we adjust to it has always determined our success. However, during the present crisis, it appears all we have is uncertainty and change. Since it is spring, and spring means baseball, consider that this crisis has thrown us all a massive curve ball, and it is up to us to foul it off.

A solid accounts receivable management process will make your business more resilient.  

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.

Small Business Owners: Now is the Time to Review Customer Accounts

Posted by Marilyn Miller on April 15, 2020  /   Posted in Uncategorized

I just heard on the news that a landlord in New Jersey waived rent for his tenants for three months. What a generous and compassionate gesture! This particular landlord has the means to take the hit, and he is also getting some assistance during the Covic-19 crisis. Small businesses, even with government assistance, may not have the means to waive payments, and may have only a limited ability to delay them.

How long can you afford to delay customer payments?

While you are working through this crisis, I hope you are monitoring your accounts receivable and reaching out to customers who are behind. Not all customers have no ability to pay you. Some may ask for an extension on their terms, or will ask to lower their monthly payment to you. You will not know unless you ask.  If you delay any contact, you may be asking for trouble. 

Too much delay is like gambling with your accounts receivable. Here are some issues that can develop:

1.  The delinquent customer could move out of state. This would not make it impossible to collect but it will likely make it more difficult.

2. The delinquent customer could sell an asset that you might have been able to attach for payment later on.

3. A business customer could go out of business.

4. Your customer could incur more debt, be less able to pay you, or even declare bankruptcy.

5. Other more proactive creditor could take legal action and place liens on their property, wages, etc. You would then be behind those.

6. If you end up referring the customer at some point for outside collections, you could incur a higher contingency collection fee. Higher fees for older accounts (over a year, or in some cases, over 180 days) are common, because older debts are more difficult to collect.

There is nothing wrong with asking people who owe you money to pay you. Listen carefully and be compassionate with people who are not working.  If they cannot pay you now, work with them on payment terms for the future. You will find, however, that many people are happy to hear from you and willing to pay you. The only way you “lose” if you delay too long, or do nothing. 


  © COPYRIGHT 2020 United Obligations
^ Back to Top