Collection Agencies and Payment Plans

Posted by Marilyn Miller on January 27, 2020  /   Posted in Business, Uncategorized

Collection agencies make a number of mistakes, but refusing to accept a payment plan should not be one of them. We recently collected a file that was almost 6 years old, meaning that it was almost beyond the statute of limitations. Why were we successful? We offered her a payment plan. The consumer told us that the previous collection agency refused to allow her to make monthly payments. We set up an auto monthly payment with her credit card, and sent her a written confirmation. She was so overjoyed that she offered to send our client a letter praising our efforts.

Many consumers become overwhelmed by the total amount of a debt, but if you break it down for them, it often becomes manageable. It is important to remember some simple rules about payment plans.

Document. Document! DOCUMENT! Memories fail us.

It is important to detail of the plan in writing and make sure both parties sign to indicate their agreement:
  • Amount of money to be paid, number of installments, number of installments (Example: “…will pay the sum of one thousand dollars ($ 1,000 USD), payable in 10 equal installments of 100.00 each)
  • When, where, and how each payment is to be made – exact details. (Example: Payments should be made payable to {Company Name} must be mailed to {Company Name, Full Address} so that payments are received by the 15th of every month.) Also, don’t forget that this agreement should list whether interest will accrue on unpaid balance.
  • Consequences for default on agreement – Will default void the agreement? Will you charge a late payment fee? Will the file be sent to a debt collector? Make sure to specifically detail what happens if the terms are not met exactly as agreed. 

There are also several ways you can use payment plans to enhance your cash flow and make it easier for people to pay you. 

1. Obtain a larger down payment up front with small back end payments.

2. Consider an online payment portal. Ours has increased payments by 30%.

3. Accept all forms of payment, including PayPal, Apple Pay, Venmo, or even chickens. Whatever it takes!

4. Set up automatic credit/debit payments.

Keep card on file (VERY important to get a signed consent to use the card in the case of any dispute)

5. Consider payment coupons 

Coupons are very old school, but some people like them. Some people do not have bank accounts or a credit card. Some people will not pay a bill online or over the phone. They will be more inclined to pay if you send a monthly statement and envelope.

6. Offer an incentive for early payment of balance.

Be smart about your payment plans and make sure your collection agencies are too. Remember that people are busy. Make it easy for them to pay. Convenience is key!

A Debt Collector’s Advice on Medical Debt (Part Two)

Posted by Marilyn Miller on January 24, 2020  /   Posted in Uncategorized
Make sure you read and understand your doctor’s financial policy.

Do not simply sign forms without reading them. The policy likely outlines the office policy on missed appointments. It will let you know what will happen if you fail to pay your out of pocket costs. If you fail to pay your doctor,  you could become responsible for any costs of collection. 

Your doctor is not trying to deceive you – just the opposite. They are trying to communicate their policies to you. It is on you to make sure you read and understand them. When you sign the policy you are entering into a contract, so be aware, and ask questions.

If your cannot pay your entire bill, contact your physician and speak to them. Work out a payment plan.

Medical bills do not go away because you ignore them. Pick up the phone or send a letter to your physician and ask for a payment plan, a discount, or if you are totally unable to pay, ask for the debt to be forgiven. I am confident you will be happily surprised at the willingness of your doctor to work with you. But, you will not know that unless you try.

Do not blame your doctor for the limitations of your insurance policy.

Your doctor or dentist did not write the your insurance policy, or impose a deductible on you. In many cases, the insurance company limits how much they doctors be paid, which is actually limits the cost to you. 

Also, do not expect your doctor to be an insurance expert. Look at it this way – would you call your insurance company for medical advice?

Are you really “covered” or “all set”?

When you hear that a procedure is “covered”, it does not necessarily mean that your insurance is going to pay 100% of the claim. There are often out of pocket costs, like deductibles, coinsurance, co-pays, or annual limits. If a claim is not covered, it means your insurance will make no payment or adjustment, and you will be responsible for the entire amount.  If a claim is covered, some payments or adjustments will be made, but you may still be responsible for a portion. Again, it is your insurance policy that determines these things, not the doctor. Know your policy terms!

When you check out at the doctor’s office, you may be told you are “all set”. Do you know what that means? Does it mean you will not have to pay anything at all? Maybe. However, it more likely mean your doctor’s office has the information they need to send the claim to the insurance company, and that they will bill you if the insurance company advises any out of pocket costs to you.  Ask questions!

Everyone makes mistakes, and there are certainly billing errors that are not your fault. However, it is your responsibility to provide information when needed, and to advocate for yourself. 

Many debts sent for medical debt collection could have been resolved easily with better communication between the physician and patient. Take charge and avoid problems down the road!



A Debt Collector’s Advice on Medical Debt (Part One)

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

I have been a debt collector for 15 years. I have built my business to focus on small local business. We are members of the community where we collect. When small business owners do not get paid, it has an immediate impact. In the short run, businesses may have to delay paying their creditors, or put off buying equipment or beginning a new marketing campaign. In the long run, they may have to raise their prices or cut back on staff.

Small medical and dental practices are particularly hard hit with bad debt, much of it resulting from increased insurance out of pocket costs. 

I believe that my clients have a right to be paid for the work they do. However, I also believe they have a responsibility to maintain strong billing practices and to take steps to communicate their financial policies to patients clearly. 

My purpose is clearly to recover money for my physician clients. However, many successful medical debt collections result from helping consumers understand their insurance policies, or by putting reasonable payment plans in place.

Often, consumers can avoid having their files sent to collection. So, with great humility, I provide the following advice:

Learn what is in your insurance policy.

Insurance is confusing. Policy terms and conditions can change from year to year. If you obtain insurance through your business, ask your employer (your supervisor or human resources manager) how to get more information on your health insurance coverage.  Or, call the numbers listed on the back of your insurance card and ask the insurance company directly. Your doctor is not an insurance specialist. While your doctor likely has a competent billing manager, they do not have knowledge only your insurance company will have, such as how many other claims are pending at any given time.  Be proactive. Verify your own insurance benefits before you see the doctor. Do you have a deductible? Are any services limited to a certain amount per year?

If you receive a bill from your doctor or dentist that you believe is incorrect, do not ignore it.

I often hear from people that they have received multiple bills that were “not correct”, but ignored them, believing insurance “should have paid”. There are many reasons why a certain claim might not be paid. Sometimes the insurance needs a small piece of information that only the patient can provide. Sometimes the wrong insurance has been billed. If you do not correct these issues, who will?

Insurance claims are time sensitive. Your doctor’s office has to file insurance claims promptly or be barred from filing them at all. That is the doctor’s responsibility. However, it is your responsibility to provide correct insurance information to your doctor, and to assist the insurance company with any information they need to pay the claim. 

So, if you get a bill, you think is not correct, do not delay. Pick up the phone and advocate for yourself.


More to come…





Collection Agency: Necessary Evil?

Posted by Marilyn Miller on January 20, 2020  /   Posted in Uncategorized

For nearly 15 years, I have helped run a collection agency and focused on helping small businesses recover bad debt. I have no interest in large commercial debt portfolio buying. I want to speak with my clients and understand their business needs. I have made mistakes, but each mistake has resulted in a positive change.

Is a collection agency a necessary evil?

Perhaps, but the collection agency is not responsible for the fact that the debt exists. The agency is there to help recover money. Hiring a collection agency with a positive outlook will always get better results.

There are, of course, times when the relationship between and agency and company fails but I believe that any problems are avoidable and stem from three factors.

The first factor is a misfit between the creditor and its agency.

A company that hires an agency that either lacks the skills or the desire to collect files in a way that works for their business. Also, the company could be using a collection agency when a different method of recovering money would be more appropriate. For example, since most agencies work on a contingency fee basis, some businesses will hire a collection agency to collect a large complex litigation that needs to be litigated. Collection agencies can and do handle complex, large collections but choosing them solely to avoid paying an attorney retainer could be counterproductive. We get it. Paying money upfront when you are already owed money stinks. However, like in any other business relationship, it is important to hire someone who is good at doing what you want them to do. Balancing the right collection partner with managing the cost of collection is not easy, but it is critical to success.

Similarly, selecting a collection agency solely based on the lowest contingency fee is a mistake. What services are included in the fee? Are there any additional costs? How long does the agency actively work the file? Does the agency have experience with your type of business and can they provide references?

The second factor that could cause problems is lack of respect.

A collection agency must be respectful of their customers business and perform their services in a professional manner – always. A business must work with their agency to provide all the information they have. If you know there is a problem with a file, and do not disclose the issue beforehand, your agency may feel that you are wasting their time. Remember, just because you pay no fee upfront does not make it free. Your agency is doing work on your behalf because they believe their actions will bring a mutually beneficial result, so it is important that you are committed to the process as well.

Lastly, poor communication can doom any business relationship, but it is particularly important with bad debt collection.

Both sides need to clearly communicate their goals, and the agency should provide regular updates on their progress.
Like any other relationship, it all comes down to both sides working together for a desired result. Starting the relationship not with regret and anger but with respect and openness means you are both likely to benefit in both the short and long term.

Collection Agency Success Starts with Creditor Best Practices

Posted by Marilyn Miller on January 13, 2020  /   Posted in Uncategorized

Collection agency success depends not only on the experience and perseverance of the agency but in how well you prepare files for collection. Consider your agency as a necessary evil if you wish, but treat them like a trusted partner.

From the first time you work for a customer or patient, you should be collecting information.

The more credit you think you might extend to a customer, the more information you should collect. Medical offices already gather information on patients for emergency contact, billing information and medical history. Such information should be on a separate page from patient financial agreement where you outline offices policies regarding payment.

To my business credit customers I always recommend they “think like a bank”. A bank would never loan money without a thorough review. Why should you?  Collect not only customer contact information, but trade and bank references and make sure to verify them. Your contract should include a personal guarantee, which means that the owners will be personally liable for any debts if the company folds.

Clearly outline your payment terms.

Include the consequences for default on payment: interest, cost of collection or attorneys fees.

Immediately after you provide product of service, contact customer to make sure they are happy. Use the occasion to verify the correct billing contact – it may be a different person than the one who ordered the work. Bill promptly. Send clear and readable bills.

Make the regular follow up on delinquent receivables a priority. It is no less important than any other management function. Document, document, document!

Bring in the experts!

Hire a collection agency that is a good fit for your company.  Do not delay sending files – something really is better than nothing.  If someone has not paid you in 90 days, bring in the experts!  Your submission to the collection agency should contain your invoice, all contact information, contractual information and background information on the debt.

Once you submit a file to a collection agency, get out of the way and let them do their job. Treat the agency as a valuable partner. If customer calls you and asks to be pulled from collections, do not do it.   If you get a payment directly, let your agency know immediately.  If you learn a new piece of information – such as a new address or job change, pass it on. You would be amazed at what your collection agency can do with new piece of information.

The best collection agency results start with you. Make sure you are doing all you can to succeed.

Eight Signs it is Time to Hire a Collection Agency

Posted by Marilyn Miller on January 10, 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 MORE Ways to Improve Results with Your Collection Agency

Posted by Marilyn Miller on January 08, 2020  /   Posted in Uncategorized

Your cash flow will improve greatly if your collection agency does a good job for you.

Here are some more things you can do to help make that happen:

Make sure customers or patients sign a statement of financial responsibility.

If you are already using a customer contract, it probably includes language about what will happen if the customer fails to pay on time. However, you do not need a complex contract. You simple need customers to sign a statement that clearly outlines your expectations for payments and the consequences of non-payment. Something like this:

Invoices are due and payable upon receipt. Any invoice not paid within thirty (30) days will be subjected to finance charge of 1.5% per month (18% annually). You agree that if your files are referred for outside collection, you are responsible for all costs of collection, including but not limited to collection agency fees, attorney fees and court costs.

Similarly, if you are a medical practice, patient should be advised of your billing practices and acknowledge that they are responsible for fees for your service, whether or not they are covered by insurance.

How does this help improve collection agency results? First, it will help the agency resolve disputes. Secondly, a contract can lower your costs of collection.

Stop providing product or service, whenever possible.

Customers who can continue receiving your product or services will be less inclined to pay for past charges. I have a customer, a medical practice that was allowing patients to come back year after year, even if they owed large sums of money. They instituted a policy that any patient with a balance had to at least enter into a payment plan if they wanted to be seen. Their collection recovery increased dramatically.

Let your collection agency know which customers you would take back once they have paid. Your agency can use that information to encourage them to pay.

Don’t send one file or your toughest file to “try them out”

Your agency is taking a leap of faith by working on your file. They do not get paid unless they collect, and if you only give them one file, you may not be able to assess their effectiveness. Also, your agency should feel that you are not serious about a long term partnership.

Delaying sending files only means the debt gets more stale and that you could wind up paying a higher fee. Your agency is taking a leap of faith by working on your file. So, take the leap with them and give them  every opportunity to success.

Be realistic

I once took on a new client that had let their bad debt mount up for years, until they had $300,000 outstanding. They finally hired us, and after one month, were disappointed that we did not get it all. Many of the accounts were three and four years old, and required significant research, which takes time. Luckily we were able to explain the process to them and within a few months, and help them set realistic expectations for recovery. It was not long before we began producing monthly checks to them.

Also, listen to your agency if they tell you that taking a settlement makes sense. Remember they are compensated with a percent of what they recover, so if you take less, they will too. Sometimes less money today is better than dragging out payments indefinitely.

Relax and trust your agency do their job.

Calling your agency ever week to check in is not going to help with your recovery. While your agency should update you regularly, they need to focus on collecting for you. Let them do their job. Also, if the customer in collections contacts you, pass them onto the agency.









Five Ways to Improve Results with Your Collection Agency

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

If you have gone through the process of setting up a relationship with a collection agency, you want to make sure you are maximizing your results.

Here are some ways to do just that:

Do not delay sending files. 

Certainly you should attempt to collect on your own, but if you have not received payment, or if your calls are being ignored after 90 days, send it to your agency and move on.

Do not hang on to files for a long time just to get a lower rate. Consider that if someone owes you money, they likely owe other people too, and the longer you wait, the more chance that your customer is going to pay those other creditors first. Also, the longer you wait, the greater the chance that the customer will move or change their phone number. Your collection agency should be able to research to find new information, but public records take a while to update, and could delay your recovery.

A delay could also mean that the debtors dispose of an asset that might be used to secure your debt. I once received a an old debt from a client. The debt was over $2,000 and the customer was ignoring any contact. I researched the file, and found that the debtor had retired, sold his home and moved out of state a few months before I received the file. Had my client not waited, we could have obtained a judgment and attached his wages, or placed a lien on his home. 

Tell your collection agency all details regarding the nature of the debt.

Let the collection agency know what you have done to collect. Was the debt disputed? Was there a service issue that led to non-payment? Trust me, the debtor will be sure to tell their side of the story when contacted, and you are doing your agency a disservice if you do not give them the full story.

Similarly, if the debt is the result of the debtor passing you a bad check, keep the check and send it along with your submission. The collection agency can use state laws to help collect bad checks.  

If the debtor is represented by counsel, let the agency know.

If you debt results from a consumer transaction and the debtor is represented by an attorney, advise your agency. Debt collection laws prohibit direct contact with consumers if they are represented by an attorney. 

Do not send files that cannot be collected.

Files that are outside the statute of limitations, or debts that  have been discharged in bankruptcy cannot be collected. Write them off and focus on the money you can recover.

Pass along any new information you discover.

If you learn that a debtor has moved, or has a new job, inform your agency. Last week, a customer contacted me to let me know that a gentleman we were researching for a possible legal action had lost his job. With this new information, we decided that legal action should be delayed. 



Credit and Collections Resolutions for 2020

Posted by Marilyn Miller on December 31, 2019  /   Posted in Uncategorized

Resolutions. We make them. We break them.

These credit and collections resolutions, however, are easier to keep, as they do not involve huge changes. Some simple adjustments will make a big difference in your 2020 cash flow.

Gather information on customers and keep it updated.

In order to have an effective credit program, it is important to know your customers and how they pay. It only takes a few minutes to obtain basic information on a new customer, and it is well worth the effort. Use each contact with the customer as an opportunity to update or add new information.

Amend your customer contract to help you lower your cost of collection.

I am often asked by customers if I can add my fee onto the debt, and collect it.  I can and do collect it if (and only if) the customer has agreed in writing in advance to pay the costs of collection. It is not enough to have a statement on an invoice.

If you have a signed agreement, you can recoup some or all of your costs. State laws vary as to the amount you can recover. In all cases, however, you must get it in writing.

Commit to a regular accounts receivable review. Adjust credit terms when necessary.

Stay on top of your receivables. If you make it a habit to review the aging of your accounts receivables, it will become apparent which customers deserve the best terms, and which customers will need to be limited or cut off entirely.

If a customer pays quickly you may decide to raise their limit. Similarly, you may find certain customers need to be limited due the seasonal nature of their businesses.

Remember that you do not have to grant credit to customers. Credit terms will make you more competitive and can actually help grow sales, but they have to work for you.









Barter for Services – Is it a Good Idea?

Posted by Marilyn Miller on December 18, 2019  /   Posted in Uncategorized

Barter for services sounds cool, doesn’t it? It means that you can trade your product or service to obtain another’s product or service without exchanging money. Value for service. Easy, right?

It can be. It can actually help an entrepreneur who is short on cash obtain services they need but may not otherwise be able to afford.

Here are some examples of small business owners who claim to have successfully bartered their services:
  • An artist who has no health insurance trades his paintings with his doctor, an art aficionado. 
  • A small publisher who trades advertising space in exchange for his rent.
  • A small consulting company that offers her coaching services in exchange for office cleaning.

I have some questions, however. How does each party value their services? What happens if one party is not pleased with the product or service, or feels they were not given enough value with respect to the value they received? What if one party does not perform, for example if the cleaning company takes consulting services but fails to clean as promised? 

Also, consider tax consequences of barter. IRS guidelines require the reporting of the fair market value of bartered products of services in the year were received. 

If you are considering barter, or currently bartering your services, make certain that you put the agreement in writing. Make certain to outline the basis for the exchange, and how it is going to work. Also detail the consequences of non-performance. Barter is a twist on a credit transaction, and all credit transactions must be backed by a contract.

Proceed with caution. I see too many collection files that started up as a cool barter deal, and ended in a non-payment or dispute. 






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