Author Archives Marilyn Miller

Collection Agency: What Information Do They Need?

Posted by Marilyn Miller on February 19, 2018  /   Posted in Uncategorized

If you are going to hire a collection agency, you want to make sure you get the best results possible.

Communication is key in debt collection, and sending your agency the right information will assist the agency in determining the best bad debt recovery plan for your business.

It should be easy for you to submit business to your agency. Ask your agency for a form or checklist to help you prepare files for submission. Streamlining the process should NEVER, however mean leaving off important information.

Here is a list to get your started:

  • Detailed invoice or statement showing all payments and charges.
  • Customer contact information including at least address, phone, email. Send whatever you have, even if you think it is outdated or unimportant. Your collection agency can research using an old address or phone number. (Medical practices should take care not to send any health protected information.)
  • Documentation of any payment arrangements or contractual information. You need not send an entire contract, only the parts that reference payment terms, consequences, or any information that documents your claim. (For example, if you provide a service plan but the debt you are attempting to recover is the result of something that was not covered by the service plan, include a copy of the exclusionary language).
  • Any and all correspondence from the customer or their attorney regarding disputes.

Even after the file has been sent to your collection agency, you may receive new information that is necessary and important for your agency to receive:

  • Notice of representation by an attorney, or notice of bankruptcy. This information must be conveyed to your agency immediately upon receipt. State and federal laws prohibit a debt collection agency from contacting debtors directly if the debtor is represented by an attorney or under the protection of the bankruptcy courts.
  • New information – New address, phone, new job.
  • Any request for new product or service, or any communication regarding a promise to pay or an offer of settlement made directly to you.

Remember that your debt collection agency is a trusted partner, and give them the tools they need to get the job done.

Credit Reporting and Debt Collection: Does it Work?

Posted by Marilyn Miller on February 16, 2018  /   Posted in Uncategorized










Credit Reporting and Debt Collection are not the same thing. Reporting delinquent debts to the credit reporting agencies Equifax, Experian and Transunion is one of the tools that can be used to help collect a debt. Many people believe it to be the most important thing a collection agency can do for them, but it is only one tool. And, in my opinion, many collection agencies rely too heavily on it. Let me explain.

Not getting paid stinks. It is an insult and a betrayal of trust. Although it is a business issue, it feels personal. You are angry and call a collection agency to help recover the money owed to you. The first thing you tell your collection agency is that you want the debt reported to the credit bureau because you do not want your customer to “get away with it”.

There is a huge problem with that type of thinking. Your customer has already gotten away with not paying you. You have nothing – zero. So instead of focusing on getting back at the customer, focus on recovering as much as you can.

This is where the collection agency comes in. Ask your collection agency what they will do to recover for you. If credit bureau reporting is the first thing they tell you, it likely means that is pretty much all they are doing. Perhaps they are sending a letter and making a few calls, but after a month or so, the debt is parked on your customer’s credit report and nothing new happens.

So does credit reporting actually help collect a debt? It can motivate your customer to pay the bill so as to avoid the impact to their credit score. Also, there is a chance that even if your customer does not care about their credit score today, they will at some point in the future. Federal and state laws vary on how long debts can be reported, but the “future” could be years from now though. How long do you want to wait? What is your collection agency doing in the meantime?

In my experience, most people sent to collections are not primarily concerned with their credit scores. It may be an issue, but it is not the most important issue. The most important issue, the one we hear again and again is just not having the ability to pay. Therefore it makes sense to work with people and get them into affordable payment plans, rather than punish them for something that may be totally out of their control. Even for those customers that intentionally stiff you, your focus should not be on getting even with them. Your goal, and the goal of your collection agency should be to recover as much money as possible. It can be done without credit reporting. I know – I have been doing it for 14 years.

As of July 1, 2017, credit reporting agencies were also required to remove many debts that did not have key identifying information on such as social security number and date of birth. Going forward, if do not have complete information on customers, the credit bureaus may be unable to accept reportings. The impact of medical debt on a credit score has also been minimized So an active plan for recovery becomes even more important.

Credit reporting and debt collection, therefore, are two distinct things. One is a tool that may or may not work, and the other is a process – an action word. What actions you and your collection agency take will make the difference in getting you paid.




Debt Collection and Small Claims Court: Sometimes the Answer, Sometimes Not

Posted by Marilyn Miller on February 14, 2018  /   Posted in Uncategorized

Debt collection and small claims court should be a natural fit. Sometimes they are. However, it can also turn out to be a huge waste of time and money. So how do you learn how to use the courts effectively, or how to you decide that you need a different approach? Here are some key factors to consider:

Time and Cost – Getting a case ready to go to court takes time. You will likely have to appear in court, at least once. After you receive a judgment, you will still have to collect the money. Decide how much time you want to spend on a file.

I was in a Maine Small Claims courtroom recently. A local plumber was there with a half dozen cases on the docket. Many of the cases were under $500.00. I did not speak with him, but I am sure that he made the decision that bringing 6 cases to court was a good use of his time. It can take a few hours or most of the day to go to court, so he had to decide that the loss of that time working on plumbing was worth it. I have to wonder though, as I have seen a plumber’s hourly rate these days! If the defendants showed up and paid that day, perhaps it would be financially feasible. However, many small claims judgments are won by default, which means the defendant does not show and loses the case (that is, the case is decided in your favor). In the case of a default judgment, our plumber would have to spend more time working to collect the judgment. Small Claims judgment collection could mean more time and expense.

Let’s do the math. It costs $ 55.00 to file a small claims suit for $500.00 in Maine. The cost is for filing only: there may be additional costs of certified mail or hiring a sheriff to serve the law suit. The average hourly rate for a residential plumber in Portland, Maine is 85.48. If we assume that two hours for attending a small claims hearing, a conservative estimate, we have “spent” $ 170.00 in time that would have been billed for plumbing. Add court costs and you are nearly at half the value of the debt you are seeking to recover, without taking into account additional costs and time spent collecting the judgment.

The plumber in this story. I can only assume, believed that bringing a number of cases to court made sense. Consider time and cost before proceeding. Also, what rate your collection agency charge to do the same thing?

Expertise – If you win a small claims suit and you know exactly where your customer works or banks, then it likely makes sense to do it on your own. However, estimates are that as many as 75% of judgments go uncollected for a variety of reasons. Make sure you know where the assets are and how to get them.

Case in point: A client asked me to collect a $2,000 judgment. Their lawyer had obtained the judgment and they thought, had put a lien on the customer’s home. However, when I took the file over, I checked and saw that the attorney had indeed put a lien on any property owned in York County, Maine. In Maine, a judgment lien, or Writ of Execution is filed by county. It took me 5 minutes to find out that the customer’s home was in Androscoggin County, making the attorney’s lien essentially worthless.

Make certain that you, or whoever you are using, knows what they are doing. If you use an attorney, make sure they are experienced in debt collection – both the court process and post judgment recovery.

The bottom line is that there is almost always a way to get paid, but no one approach is the right one all the time. Do what makes sense and will help recover money owed to you.




Collection Agencies and How They Work – Is it Magic?

Posted by Marilyn Miller on February 12, 2018  /   Posted in Uncategorized

If you are like many small business owners, you have taken time from your business to work on bad debt collection. In some cases, you may have chased a customer for months without success. When you decide that customer over to a third party collection agency. When the customer pays the collection agency, you are probably upset that it took collection activity to get paid, and wonder what the collection agency did to make it happen, am I right?

Here is a trade secret. Bad debt collection is not magic. It is the result of consistent and focused effort. There are many things that you can do to reduce the risk of customer bad debt  as well as ways to protect your right to payment.  If you do send a file to a collection agency, make certain you give them all the information they will need to recover for you successfully.

To reduce customer bad debt and protect your right to be paid, it is important to get as much information as you can on customers and keep it updated.  A customer contract, even a basic one, is always helpful. Your bills must be timely and accurate. Create a standard operating procedure to follow up on slow or non-paying customers. Know when you need to hire a collection agency.

Your collection agency are not magicians. There are certain files that should never be referred for collection, for example, any file that is beyond the statute of limitations or the result of an error in billing, or when the debt is the subject of a serious dispute that should be referred to an attorney for litigation. On the other hand, a collection agency has special tools to help locate people and their assets. Collection agencies use a variety of methods to recover for you, and with your support, can improve your cash flow like, well, magic.

Small Business Owners: How it Feels When You Do Not Get Paid

Posted by Marilyn Miller on February 09, 2018  /   Posted in Uncategorized

“Trusting someone is my decision. Proving me wrong is their choice” – Unknown

There is no denying that every business relationship involves a good deal of trust, and also no denying that when the business relationship is compromised, there is a betrayal of that trust. One of the most common ways a business agreement is violated is nonpayment. Nonpayment for any service or product is never a good thing. But for a small business owner, the consequences go much deeper than economic effect. It becomes personal.

In theory, business and personal matters must always be separate, but small business owners often do business with family, friends and neighbors. They put their personal energy into their work, and it is their personal energy that makes them good at what they do. They provide their product of service with an expectation of being paid, and when they are not, it feels like a betrayal. In addition, they feel as if they are put in the very awkward position of having to ask for their money, a task which takes time and energy away from the work they love.

I am passionate about the right of small business owners to be paid for the work they do. Yet every day, I see them walk away from money owed to them. I asked some Maine small business owners what how they feel when they do not get paid and also what, if any factors keep them from pursuing money owed to them.

Local healthcare practitioners feel a sense of betrayal and disrespect. “Over time you build up a rapport with patients.  I feel like we try very hard to work with any financial issues,” said a Portland chiropractor.

A physical therapist in town said, “It feels like our services aren’t valued and sometimes it feels personal, as if we are being taken advantage of. It is also scary because we are a small business and can’t pay our bills if our clients don’t pay in a timely fashion”

Another physical therapist, this one from Penobscot county replied, “It is extremely disappointing when a patient decides not to pay us for our services. We give our patients every opportunity to pay us, we offer small monthly payments, give them a lot of time to pay. We are a small business and find it disrespectful when they don’t pay.”

It is not only health care professionals that feel the sting. A local landscaper described feel as if services were “ stolen” from him.  A website designer told us, “I felt disrespected. Slapped in the face. Blown off. Robbed. And angry. (It) made me wonder why I work at all.”

Not being paid makes a small business owner question their value, Confrontation, is never easy, and the time and energy involved, coupled with a fear of retaliation in the form of fewer new business referrals, often keeps them from trying to recover money due them. It makes you wonder, do you really want a person who has stiffed you to refer to another (potential) non-paying customer?

So yes, small business owners have a right to be paid. But they also have a responsibility to take a look at how they are extending credit.  Are they doing everything they can to protect the business? Nothing is certain, but certainly doing nothing is not a good alternative either.

Small Claims Court: Common Mistakes Small Business Owners Make

Posted by Marilyn Miller on February 07, 2018  /   Posted in Uncategorized

It happens every day. We get calls from small business owners who have taken matters in to their own hands and taken their non-paying customers to small claims court. They get a judgment but the debtor still does not pay. What went wrong?

Although the small claims process was designed to give small business owners access to the court system, it is not the answer for all files. Here are some common mistakes we see:

1. Suing the wrong party – If your beef is with a business, and you do not have a personal guarantee, you likely have no cause of action against the owners. The opposite is also true. If your customer is a person using a trade name, (not a corporation), then it may be pointless to sue the business alone. It is important to make sure you have the right party. Of course, this means you have gathered the correct customer information and have a good customer contract to begin with.

2. Suing a party with no assets. – Make certain there is something to get!

3. Suing someone who already has many judgments against them – Try to do as much research as you can before you file the lawsuits. Some states have a very good website where you can look to see if your customer has other judgments again them.

4. Filing suits that do not make economic sense – If you have to pay $100.00 to file suit, is it worth it for a $250.00 debt? There may be better options.

5. Suing for the wrong amount – Make certain your suit reflects all charges and payments. You will need to have a customer financial agreement in order to ask for pre-judgment interest.

6. Not asking for post-judgment interest or other costs – Do not make the mistake of assuming that you will be awarded interest or your costs of collection. Ask for it! The court may or may not award everything, but you have no chance of getting what you do not request.

7. Not getting proper service – Getting service means making sure the person you are suing actually receive the lawsuit. Take the extra step of making sure you research and have the correct address.

8. Not bringing the right forms to court – I once saw a business owner spend all morning in court only to have his case dismissed because he did not bring proof that the defendant was not in the military. Most courts have guides to help you with the process, or ask the court clerk for help.

9. Not bringing background material to court – Even if the defendant has never responded to you and you expect that they will not appear, come prepared to do battle. Bring your entire file.

10. Expecting that the court will collect the money for you – Small claims court does not collect the money. You have to do that, or hire someone to do it for you.

Do not make the decision to take files to court yourself soley on your desire to save on collection agency fees.Take a look at your past due receivables. Perhaps it makes sense to hire a collection agency or an attorney to help you collect money without having to spend your time away from your business. Not all files should be litigated. Some files are only going to be collected if they are litigated. The magic is in knowing the difference.


Collection Agency: What Information Do They Need?

Posted by Marilyn Miller on February 05, 2018  /   Posted in Uncategorized

It’s a great idea to hire a collection agency.

However, if you really want to get the best bang for your buck, you have to assist the agency by giving the tools and information they need.

First, you must provide the agency with a complete submission with all relevant information. Your collection agency should give you some  guidance here, but for starters:



  1. Detailed invoice showing all services provided, cost of services, payments, etc. Your invoice should include the date(s) service was provided.
  2. ALL information you have on the delinquent customer. Provide name, address, all phone numbers, email, place of employment, date of birth and any other relevant data. If you do not have a current address/phone/email, send the old information. Your agency should be able to “skip trace” or research using the old information.
  3. A copy of your contract. If you don’t have a contract, send any relevant information that would show that the customer actually ordered the work.
  4. Any relevant correspondence from the customer. For example, submit any change orders, disputes and/or an unfulfilled promise to pay. If you do not know if it is relevant, send it.
  5. A brief description of the nature of the debt. If the customer paid you with a bad check, make sure to mention it. If you are a subcontractor and you know the general contractor was paid, but did not pay you, that is an important detail you must share. You get the picture, give any  detail you think might be important.

Secondly, once you submit a file, let the collection agency do their job. Do not send out monthly invoices. If the customer calls you begging you to take them out of collections, do not relent. I cannot tell you how many times a client has asked us to pull a file, only to get that file back a month or so later when another promise to pay has been broken. Certainly if you receive a payment, accept it, and make sure to notify your agency immediately.

Finally, share any new information you may learn on the delinquent customer. You may hear that the company is going out of business, laying off employees, or purchasing new equipment. If your customer is a consumer, you may learn of a new job, divorce, or relocation. As with any information, err on the side of giving too much information. You would not believe how one small piece of information will turn a “dead” file into a successful collection.

Remember, your collection agency is a trusted partner. Work with them, and you will be delighted with your results.

Debt Collection Letter: How to Get Best Results

Posted by Marilyn Miller on February 02, 2018  /   Posted in Uncategorized

A debt collection letter is a key tool to recover money owed to you. How well you communicate with customers that owe you money is important. We do believe that communication should begin with a customer application that gives you information you may need later, and also at least a basic contract that outlines your policies regarding payment and non-payment.

However, even with the best of planning, some of your customers are going to be late paying you. It is very important that you develop a process to follow up on your delinquent customers, and a critical part of your arsenal will be a well worded collection letter. Have a template letter ready and you will use it again and again.


Here are some tips to help you:

1. Timely – Your letter should be sent as soon as the account becomes delinquent. You must appear to your customers to be on top of your receivables.

2. Stated amount due and detail – Make certain to include the amount of the debt in your subject. Also include invoice number and/or brief description, due date of payment.

3. Past due statement – Your first sentence must clearly indicate that the stated amount is past due. You can also include details of your contract, such as, “per the terms our customer agreement, we are now applying a fee of $5.00 for each month this balance remains unpaid”, or “our payment terms require full payment within 30 days”.

4. Little bit of guilt – Remind customer that they asked for service/product and your it is not free. “Our services were provided to you in good faith at your request with our expectation that you would pay for them.”

5. Demand for payment – how to pay and timeline for payment.  Be specific in the methods of payment you will accept. List specific due date – “within 5 days from the date of this letter” or even better, “Friday, June 30, close of business day.”

6. Consequences for non-payment – Discontinue service? Refer to outside collection? Make certain to state specifically that the consequences will follow if payment not made by due date.

7. Leave door open – Always give the customer someone they can go to discuss any issues or to set up a payment plan.

One option you may want to consider is to offer a small discount if the balance is paid by the due date. However, if you do this you must make certain to specify that it is a limited time offer and that full amount will be due and owing if not made in the specified offer period.

You may want to use a series of two or three letters of increasing urgency. Your letters should always be professional but very to the point. Describe the consequences and the sense of urgency without threatening.

Consider sending the debt collection letter using certified mail.

Most importantly, once you have sent these letter, it is critical to do what you say you are going to do. If you do not get paid in 14 days, send the file to your collection agency, without delay.

Here is a sample of a debt collection letter you may find useful. Sample Final Notice

Small Business Debt Collection: Top 5 Mistakes You Want to Avoid

Posted by Marilyn Miller on January 31, 2018  /   Posted in Uncategorized

Small business debt collection is not easy. Staff resources and time are limited, as most employees wear two or more hats. You do not want to make it any harder by making mistakes that are avoidable. In our experience, here are the top 5 mistakes in small business debt collection.

  • Waiting too long – It may be lack of focus, or an attempt to avoid costs of collection, but all too often small business owners wait far too long to send delinquent customers to collection. After 90 days, if you have no contact, get rid of it and bring in the experts. Holding onto files too long gives customers the impression you are not serious about your efforts. In fact, the longer you hold the debt the more chance you will increase your cost of collection, since collection agencies generally charge a higher rate for older debts.
  • No contract – A contract is your best debt collection tool. No time for a long formal contract? At very least send an email confirming prices and terms for payment and ask customer to acknowledge it. If your customer is a business, make sure your contract includes a personal guarantee.
  • Giving away leverage – If you had an unpaid bill, but your creditor allowed you to still receive service or product, how seriously would you take paying that bill? If you have leverage, use it. Do not allow clients to continue being the beneficiary of your good work. We realize that some businesses, medical practices in particular, may be unable to “fire” non-patients, but do what you can.
  • No consistent and coordinated effort – Small business debt collection requires commitment to a regular plan to review aging receivables and take appropriate actions. Have a strong collection letter ready and use key staff to follow up on the phone. One person has to drive the process, but the work can be shared.
  • No flexible payment options – As strange as it may seem, too many businesses do not even accept credit cards. Know your customers and how they pay, and give the opportunity to pay in a way that works for them. Some people want the “old school” option of sending in a check. Provide them an envelope to do so. Other people love paying their bills online so set up a payment portal that makes paying quick and easy.

Again, all of these mistakes are avoidable. Take a hard look at what you are doing, make some subtle changes and your small business debt collection will be much more successful.

Collection Agency: Why Are You Waiting?

Posted by Marilyn Miller on January 29, 2018  /   Posted in Uncategorized

How long do you wait to hire a collection agency? Are you holding on to your past due accounts hoping that customers are going to come to their senses and pay you? How long do you normally wait to receive payment?We advocate waiting only 90 days before taking action, but we realize that there are many reasons to wait a bit longer. If customers are talking to (not ignoring!) you and if you believe that is a real possibility they will make good on payment AND if you are willing to wait because you wish to keep them as a customer, that is one thing. An active decision to extend credit a bit longer can be a good business practice in the long run. However, too often we see our customers simply being too busy to keep track of their receivables, and the pile of money owed to them grows by leaps and bounds. Some customers are uncomfortable asking for their money. Passive “decisions” to delay collecting money owed to you can cost you dearly. Here are some things to consider:

1. Perception – If customers owe you, chances are they owe others as well. Do you want to become the creditor that they don’t pay because you are not asking for your money? (The squeaky wheel and all!).

I recently received a large receivable from 2014 for collection. When I contacted the debtor to collect it, his initial reaction was, “Where have they been for 4 years?” Although the debt was still well within the statute of limitations and very collectible, the perception on the part of the debtor company was that it was not important enough to the creditor to warrant paying. Our intervention made it an urgent item, and they are now in a payment arrangement.

2. Liquidation – Companies go out of business every day. They also sell assets and relocate. The same is true, perhaps more so, for consumers. If you wait too long to pursue money owed to you, you run the risk that there will be nothing to get when you decide it is time to take action!

3. Prove It! – Imagine this: A customer owes you money but you decide to wait a few years, and then finally pursue it. They dispute receiving the product/service, or dispute the quality of the service, even thought they have never complained before. To collect your money, you have to respond to their dispute. How good are your records? You may still have the invoice, but not the background information. Some disputes requires an individual’s personal recollection of the circumstances, which if not detailed in writing at the time of service, may be lost forever. We see this type of thing happen all the time.

4. Increased Cost of Collection – The longer you wait. the greater the chance that your collection agency will charge you a higher fee to collect it.

These soft costs of delay are very real. Can you afford to wait?

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