Debt Collection vs. Billing

Posted by Marilyn Miller on May 15, 2019  /   Posted in Uncategorized


Debt collection is a process. It is strategic and involves more than simply billing your customers.

Certainly, billing customers is important.

Too often, people tell us that they would have paid their debt but did not receive a bill. Prompt billing of your customers keeps your receivables cycle moving. Your bills should be easy to read, and provide clear instructions on how to pay. Make it easy for people to pay you.

The trouble comes in when you are billing customers and they are not paying you. At this point, you need to do more.

How many bills should you send to customers?

There is no set rule for how many bills you should send someone who is not paying you. It depends on the size of the bill, the value of the customer to you business, and a number of other factors. However, if you have sent two or more bills to a customer and received no response it is time to …

Pick up the phone and speak with your customers.

You will be surprised how many customers will appreciate a friendly reminder. Use the call as an opportunity to get feedback on customer satisfaction, or to sell new product or service. People are busy, and some people really do forget to pay a bill.

If your customer has multiple bills, your phone call could just move your bill to the top of the pile. If you do not ask, you may never know.

So what does a debt collector do that is different?

Imagine if you bill a customer and the bill is returned back to you marked, “Return to Sender – Unable to Forward”. You try to call the customer and the phone number is out of service.

While there is a good deal of information on the internet, a debt collector has specialized tools to find information about people. Research is known to debt collectors as “skip tracing” and it is what we do all day long.

Debt collectors also are experienced negotiators, and can handle tough customer issues. You can spend less time chasing delinquent payers and more time growing our business.



Collection Agency: We Are NOT Free

Posted by Marilyn Miller on May 13, 2019  /   Posted in Uncategorized

If you decide to hire a collection agency to help you recover money owed to you, have you made a good decision? It all depends on the reasons you are choosing a collection agency.

Here are some good reasons to hire a collection agency:

  • You and your employees are spending too much time chasing delinquent customers.
  • You are having trouble paying your creditors because customers are not paying you.
  • A growing number of customers are over 90 days delinquent, and you are not sure why.
  • Customers have moved or changed their phone numbers and you can no longer contact them.

Here are some bad reasons to hire a collection agency:

  • You just want to get back at someone and think  a collection agency will harass and abuse people.
  • You do not really want to collect the money. You just want to “ruin their credit” and believe a collection agency can do that for you.
  • You have another collection agency or attorney working for you on the same files at the same time, basically pitting the two against one another.
  • You know that you really need to hire an attorney, but you do not want to pay a retainer and you believe since collection agencies work on contingency that they are “free”.

It is the final reason, the belief that a collection agency is somehow free that is the most ridiculous. You are in business for many reasons, among them the desire to make a living. A collection agency is no different. We want to help our customers, and we are passionate about their right to be paid. However, we too have to make a living. we do not charge any money up front, but rather take a percentage of money we recover.

When we take on a new customer, we do so with the belief that we can collect money for them, and thereby earn a commission. It is often a leap of faith since we do not know much about the debtor or the circumstances that produced the debt. We are willing to take that leap based on our experience. However, if we are not provided with complete and accurate information, it becomes more difficult to get the best results. If we are not told the “whole story” by you, we will likely learn it from the debtor once we make contact. At that point, we will question whether or not you are serious about working with us. If we feel you are wasting our time, we will lose the will to work on your files. In that case, everyone loses, except the customer who got your product or service for free.

Do not make the mistake of believing that because a collection agency does not charge a fee up front, that they are free. A collection agency makes an investment of their time and effort to recover bad debt for you. If you respect that investment, the rewards to both you and your collection agency will make it worthwhile.

Maine Collection Agency: How to Find the Agency that Best Fits Your Business

Posted by Marilyn Miller on May 10, 2019  /   Posted in Uncategorized

A Maine collection agency can help a small Maine business improve their cash flow by recovering their bad debt. Agencies typically work on a percentage of sums recovered, with rates can vary based on many factors including the age and size of debt, type of business, number of files submitted annually.

A Maine collection agency seeking to recover debt owed by Maine consumers must be licensed and bonded. The Maine Department of Consumer Credit Protection in Gardiner is the licensing authority. A Maine collection agency seeking to recover debt owed by Maine businesses (commonly referred to as commercial or B2B collection) is not required to have a debt collection specific license. However, as with any relationship, you should verify that the agency is indeed a business authorized to conduct business in Maine.

Your first step is to clearly define, and then articulate your collection goals. Many medical providers prefer a softer, more compassionate approach to debt collection. They want their agency to reflect the personality of their practice. Other companies, particularly in commercial collections want a more dynamic approach, up to and including actions in Maine Small Claims Court.

Once your goals are defined, you must clearly communicate them to potential agencies and see how their approach matches yours.

Other factors to consider are:

1.       Local – How important to you is it that your collection agency be in Maine? We recently successfully completed several large commercial collections for out of state companies who were owned money by businesses in Maine.  Being local created a sense of urgency, and it also provided us the opportunity to see firsthand if the business was still operating. For Maine consumers, a Maine collection agency would have more knowledge of local economic conditions such as mill closings that might impact the consumer’s ability to pay the bill.

2.       Experience – Does the collection agency have experience in your industry? Always ask for you check references.

3.       Credit reporting – While I personally believe that credit reporting is an overused tool in debt collection, if it is important to make sure the agency has the capability to do it.

4.       Research tools – Half of the people sent for collection will need some sort of research (referred to as “skip tracing” in collection-speak. How does the agency go about finding people and their assets?

5.       Technology – Does the agency have the tools to give you the information you need? Also, does their use of technology in contacting debtors work for you? Many agencies use automated calls to contact debtors – will that work for your customers?

6.       Compliance – Consumer agencies are governed by the Fair Debt Collection Practices Act. Medical debt collection must comply with HIPPA.

7.       Legal Capabilities – While Maine collection agencies who are not attorneys cannot represent you in Small Claims Court, if you believe you may want legal services, make certain your agency has a relationship with attorneys who can take your case to court. In the same vein, make certain the agency is experienced in post-judgment collection.

8.       Rate – Notice I listed this factor last – not because it is not important. A competitive rate is great, but make sure you know what is and what is not included. Most Maine collection agencies work on a “no collection, no fee” or contingency basis. What services are included in the rate? A low rate may mean your customer only receives one letter and a few phone calls.

In the end, hiring the right Maine collection agency may be the smartest move you make for your business this year. Best of luck with it.

Cost of Debt Collection versus Debt Collection Fee – What’s the Diff?

Posted by Marilyn Miller on May 08, 2019  /   Posted in Uncategorized
The cost of debt collection is not the same as a debt collection fee.

A collection fee is either a flat dollar amount your collection agency pays per file sent for collection, or a contingency rate charged on any sums recovered.

The cost of debt collection could include other items such as legal fees, court costs, cost of liens and the like.

What both of these items do have in common is that they can be partially or often fully recovered if you take steps beforehand with a written contractual agreement. The customer or patient must be advised, and must agree in writing that they are responsible for any costs associated with referring a balance they owe you for outside collection.

Don’t have time or do not wish to have customers sign a contract?  Well, then you cannot be angry if your agency tells you they cannot recover those costs. Your agency must follow the law, and the law requires a written agreement.

Another key difference if purely semantic. If you tell customers/patients they have to pay the collection agency fee, that is the kiss of death. No one wants to pay a collection agency! But if you state that they are responsible for your costs, all of them, if their file be placed for collection, then you have a much better argument, especially if your customer wants to do business with you again. Once again though, you must have it in writing!

There are other ways you can reduce the cost of debt collection.

The longer you hold off sending files to your collection agency, the higher rate they are going to charge you. Sure, try it on your own for 90 days or so, but if you have no results in 90 days, you need to bring in the experts.

Also, make sure the rate your collection agency is all inclusive. A low rate may look good, but what is the agency doing to recover your money? What is included in the rate, and what is extra? Be very careful that services such as research or “skip tracing” are not extra.

Do not forget that if you or your staff are spending too much time chasing delinquent customers instead of managing or growing your business, that is a soft cost of collection that you can easily remedy by hiring a collection agency.



Collection Agency or Your Lyin’ Eyes?

Posted by Marilyn Miller on May 06, 2019  /   Posted in Uncategorized

“Who ya gonna believe, me or your lyin’ eyes?” – Chico Marx in Duck Soup


Your collection agency is a valuable business partner. When you hire a collection agency, you do so not only to improve your cash flow by recovering bad debt, but also to save you time. A collection agency focuses on only collecting bad debt, and they have the tools and skills needed to do so.

So, let them do their job. While collecting bad debt is not magic, there is an art to it, and it is not for everyone. I believe that you should try to collect bad debt on your own, but if you have not been successful in 90 days, bring in the experts.

Once you place the file with your collection agency, trust their advice. In many cases, they have done research and they know the best way to get the job done. Since collection agencies work with a contingency fee basis, the are certainly going to advise a strategy that has the best chance of getting you paid.

Here are a few examples from our files:

Our client is owed $5,000. Their customer is a sole proprietor with a small business and assets.  We have researched and know that he is getting ready to retire. He also owes a great deal of money to other creditors. Our advice was to proceed immediately to Small Claims Court to obtain a judgment and secure their debt. It is frustrating to me that my client, who hired me to recover bad debt, is uncertain, and wants to take some time to think about it. I am not sure if the wait is because it means they will recover a little less money, or if they are worried about going to Court, but I hope they decide soon so that we can act. If we do not move now, we will wind up behind many other creditors, or the customer will sell his assets and move away, and there will not be anything to collect

For another client, I recommended Small Claims Court again, because the debt is almost 6 years old, and about to age beyond the statute of limitations. He has not responded to any requests for payment. He appears to have the means to pay the bill. I laid the facts out to my client and he told me to go ahead, because he trusted my experience and knowledge. He sees the collection of the file as our mutual goal.

There you have it – two very collectible files – one that will pay and another that may go by the wayside.

An aging receivable is not worth anything unless it can be converted to cash. Your collection agency knows how to do that. They would never tell you how to sell your product or deliver your service. So, when your lyin’ eyes tell you the bad debt on your books is valuable, don’t believe them.

Medical Debt Collection: What I Learned from a Visit to the Walk-In

Posted by Marilyn Miller on May 03, 2019  /   Posted in Uncategorized

Medical debt collection has been a big part of my business for nearly 15 years now.  In that time, things have changed. Many small practices have been swallowed up by large medical groups. As respects medical debt collection, there have been some key effects as well: some good and some not so good. On one hand, the Affordable Care Act has provided insurance coverage for millions, which prevents medical debt resulting from lack of any insurance coverage. On the other hand, insurance out-of-pocket expenses have risen. Large deductibles may lower premiums, but leave more and more patients with thousands of dollars of debt they are unable to pay, at least all at once.

In addition to consumers, small to mid-sized practices are especially impacted when patients cannot pay their medical bills, or pay them slowly. Cash flow becomes an issue when patients do not pay, but ongoing expenses of the practice continue.

Fast forward to today, when I had need to visit a walk-in medical clinic here in Portland. The woman at reception greeted me and after gathering initial contact information, asked me for an ID and my insurance card. She asked me to sit down while she verified my coverage. Next, she called back to her desk and reviewed with me my insurance coverage and estimated out of pocket costs.   I signed a form indicating that I would pay any amounts insurance would not cover. Lastly, she asked me for a credit card to keep on file to assure payment of the out of pocket costs.

Most medical and dental providers do not get paid up front. In order to remain competitive, they accept insurance and bill you later for what insurance does not cover. In short, they provide you credit. Although they do not have the opportunity to pull credit and checks references before providing service to you, they can minimize their risk of delinquent debts by gathering information on patients, communicating insurance benefits and making sure you know you are responsible for out of pocket costs.

Medical debt collection, therefore, is not only about chasing patients who do not pay. It begins the minute a patient walks in the door.

Debt Collection Costs: How to Control Them

Posted by Marilyn Miller on May 01, 2019  /   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?

Bad Checks in Maine: Recoverable, but Know the Law

Posted by Marilyn Miller on April 29, 2019  /   Posted in Uncategorized

Bad checks in Maine are very recoverable but it is important to know your rights and responsibility.

Some bad checks are a mistake, others are intentional. Basically, an unintentional error is considered a civil matter, and an intentional bad check issuance is considered a criminal offense. In either case, the person who issued the check is legally required to make good on the check, or face civil and/or criminal penalties.

A bad check can be either a check issued that is returned for insufficient funds or a check written on a closed account.

Maine law is very specific about the process to recover a bad check. You must send a letter to the issuer using this specific language from Maine statute:

Your check, draft or order made payable to _____in the amount of  _____   has not been accepted for payment by _____which is the drawee bank designated on your check. The check is dated _____and it is numbered ________.

You are CAUTIONED that unless you pay the amount of this check within l0 days after the date this letter is postmarked, you may have to pay the following additional costs:

  1.   Attorney’s fees;
  2.   Service costs;
  3.   Processing charges;
  4.   Interest; and
  5.   A penalty not to exceed $150.

You are advised to make payment to the address on this letter. Payment must be for the full amount of the check and must be in cash or certified funds.

This language is mandatory. As you can see, if the check goes unpaid after 10 days, you are entitled to various fees and costs. If you are not paid within the 10-day period, you can contact the authorities. Your local police department is a good place to start, although come cities and towns will refer the matter to the country sheriff. DO NOT be afraid to take this step. It does not necessarily mean that the person will be arrested. It may be just the incentive your customer needs to make good on the check.

Some other things to remember:

  1. Ask for repayment in certified funds.
  2. We recommend full payment only. If you take partial payment, you may void your ability to employ other civil and criminal penalties.
  3. If someone issues you a second bad check within a year, you may be entitled to additional funds, but you will have to go through a notification process again. However, we recommend you do not take a second check from someone who has bounced a check on you – certified funds only. Fool me once…
  4. If you do get the authorities involved, stay in close contact with them and notify them immediately if you get paid. This is very important, especially if the police would be pursuing criminal charges.
  5. Your customer contract should address bounced checks and let them know that you will pursue all lawful remedies available to you.
  6. Make sure you take contact information from anyone issuing you a check.
  7. If a check looks funny to you, ask the customer to wait while you call the bank to check.
  8. Do not take second or third party checks.
  9. If you decide to hire a collection agency to help you collect the check, provide them with copies of the bad check (both sides) and your correspondence.

There are check clearing services you can purchase, but they may be expensive. Your best bet is to have a clear and consistent policy for both accepting checks and for handling bad checks, and to make sure that you communicate it to your employees and your customers alike.

Collection Agency: How to Get the Best Results

Posted by Marilyn Miller on April 26, 2019  /   Posted in Uncategorized

If you have hired a collection agency, congratulations! You have taken an important step towards improving cash flow and saving time and effort. In order to get the best results, however, you must work closely with the collection agency.

Effective communication with the agency is key.

You should expect your collection agency to keep you apprised of their progress. They will primarily do so with monthly reports to you. You also have a responsibility to communicate any new information to your agency. If you receive a payment in your office, let the agency know immediately. If you learn any new information about customers in collection agency – address, phone, job – anything, pass it along. Research is a big part of debt collection and new information is precious to an agency. 

Also, advise your agency if there are customers in collections that you would take back once their debt is paid. They may be able to use that information and the promise of redeeming their relationship with you to get you paid.

Stop billing the customer, and stop providing service.

It is important that customers in collections see you and your agency as one united front. If someone wants to pay you, take the money. However, if they want to argue about the bill, set up a payment plan, or if they beg and plead to be taken out of collections, send them back to your agency. I always tell my customers, “Take the payments, but do not take the issues.”  Your hire your agency to resolve disputes and set up and execute payment plans, so let them take the heat.

Do not be surprised if customers sent to collections – the very same customers who have avoided you for months – call you and promise you anything to avoid “being in collections”. Stick to your guns and send them to your agency. Your agency’s efforts – even if it was just one call – made them come to the table. Plus, every single time I have seen this happen – the customer has made a couple of payments and defaulted. Then the customer winds up back in collections – except that now I charge a higher rate!

As much as possible, stop providing product or service to customers in collections. I once was attempting to collect a $ 5,000 bill for a doctor. The debt resulted from treatment for injuries resulting from a car accident, and the case was in litigation. Often physicians will accept a lien or letter of protection which “protects” the bill and promises payment when the case settles. Attorneys are often involved in these cases, and can provide letters of protection only if their clients agrees. In this case, the debtor refused to agree to lien her settlement, because she “needed the money to move”. She also refused to pay anything towards her balance. I called my client to discuss her case, and they informed me that they were currently treating her for another injury and that she had already racked up a $2.000.00 bill. This patient was effectively getting more “free” service from the doctor, and was therefore unlikely to take any demands for payment seriously.

Also, stop billing the customer. Your collection agency should send regular notice, and customers who hear from two different sources may either get confused or believe that you and your agency are not working in unison, and exploit that fact.

Let your collection agency do what you hired them to do, and treat them as you would any other trusted business partner. Expect results but assist in the process. You will be glad you did.



Credit Reporting and Debt Collection: The Upside and the Downside

Posted by Marilyn Miller on April 24, 2019  /   Posted in Uncategorized

Credit bureau reporting is often cited as the key benefit of hiring a collection agency.  A common belief is that if you report a debt to one or all three of the credit reporting agencies (Transunion, Experian and Equifax) it will assure that a consumer will pay a bill. If that were the case, why do 30% of Americans have credit scores under 600, which is considered “fair” credit at best, and poor or subprime, at best? There are also people who have no credit score at all, because they do have the need for credit. Does anyone really believe that these people will be motivated to pay a delinquent bill if they are threatened that the debt will be reported against their credit file?

So what is are the upsides, or benefits  of credit reporting as respects debt collection?

Credit reporting is definitely a tool that collection agencies use. There are times when people decide to clean up their credit because they are buying a home, or just want to be more financially responsible. At those times, consumers will pay the debts that are on their credit reports.

So does credit reporting actually help collect a debt? It can motivate your some people 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?

When a collection agency reports a debt, it makes their customers, the original creditors feel as if the delinquent customer has not “gotten away” with not paying their debt. The only problem with that thinking is that the delinquent customer already has already gotten away with it!  Credit reporting used for revenge is just silly.  Focus not on getting even, but on recovery – on getting paid.

Which brings me to the downside of credit bureau reporting…

Without even taking into account the security risks of data breach, credit reporting does have its downsides, mostly because people overestimate its effect on debt collection. Credit bueau reporting is only one tool a collection agency can use to collect a debt. My opinion is that many collection agencies overuse it, 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.

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.

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