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.