Collection Agency: Monster in the Closet?

Posted by Marilyn Miller on August 22, 2018  /   Posted in Uncategorized

Last week, my friend asked my advice on a customer who was not paying. I told her that I would happily work on the case for her, but suggested that she first send one last letter to her customer giving a final opportunity to pay. I told her to set a firm due date for the payment, and to communicate that if the bill was not paid on time that it would be referred for outside collection.

My friend followed my advice, and received payment in full. She was grateful, saying that the mere “threat” of a collection agency or the “monster in the closet” as she called it, caused the bill to get paid. I would never recommend a threat of any sort, but I do recommend constant communication with customers, even when the communication is difficult.

From your very first contact with your customer, you must communicate how and when you want to be paid. Do not be afraid to do this. You are in business to make money. You provide your product or service with the expectation of getting paid.

When customers do not pay you, they are sending you a message. So, the message you send back is important.  Chances are that people who owe you money owe other people as well. Do you think those creditors are sitting and doing nothing? How to get your bill to the top of the pile?

You must create a sense of urgency.

Your customer contract must clearly indicate your payment terms, and the consequences for payment. For example, it might say:

If your account is referred for outside collection, you agree that you will be responsible for and all costs of collection including but not limited to collection agency fees, attorney fees, cost of suit, court fees. 

Continue conversations with your customers, making sure your invoices have the terms clearly printed on them, and advise your customers how and when you expect to get paid.  Remember, a customer still wants something from you.  They want to use the credit you extend because it is good for their finances.  You as the creditor then assume the responsibility of its management.  Credit will not manage itself.

You will see that some customers pay from your final notice, to avoid being sent to collections. Others will pay only when their file is referred from collection. Do what it takes to get paid.

Do not be afraid to let the monster out of the closet. Of course, make sure your agency collects debt professionally and ethically, but let them do their job and get results for you.

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