Bad Debt Collection: How to Know it’s Time to Hire a Collection Agency

Posted by Marilyn Miller on April 20, 2015  /   Posted in Uncategorized

Small business owners struggle with bad debt recovery. First it really stinks not to be paid. secondly, it further stinks to have to spend time in-house attempting to get customers to pay. finally, it absolutely stinks to have to hire a collection agency and pay them to collect your money for you.



For most businesses, non-paying customers are a fact of life. Business owners must decide how much of their time and effort to devote to bad debt recovery, and when it is time to bring a collection agency in to assist. The desire to avoid collection agency fees should not be the only consideration, because there are enough agencies out there that finding a competitive rate should be easy. More importantly, delaying the decision to hire a collection agency can backfire, increasing collection costs and decreasing the likelihood of payment.

So when is the right time to hire a collection agency? The right time is different for every business, but here are some things to consider:

  • How much time are you and your staff spending on bad debt collection? Can your time be used more effectively elsewhere?
  • Have the customers in question made any attempt to settle with you or are your efforts being ignored? If what you are doing is not working, it is time for a new approach.
  • Do you have intelligence about your customer that would indicate it is time to take new action? (financial difficulty, company going out of business, new ownership, etc?)
  • Which delinquent customers would you like to keep and which will you terminate? You may wish to give a loyal customer more time – but not forever. Even the best customer can go bad. Know your limits.

Stay on top of your aging reports. Manage your accounts receivables and be proactive.

Looking to hire a collection agency but not sure where to start? We can help!






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