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Debt Collection Case Study: An Offer They Couldn’t Refuse

Two entrepreneurial women I know from my BNI chapter asked my advice. Each had one customer that was delinquent and each was considering hiring a collection agency.cost_of_collection

I suggested they try a simple plan: send the customer a collection letter, certified mail, offering a 10% discount. I told them to make certain the letter was clear that the offer was for a limited time only, that the full price would apply if payment not made by the due date, and that the offer period was the last stop before a collection agency.

Both women called me to report that they had been paid. By offering a simple discount with a clear written offer, they saved a good deal on collection agency fees.

Compare their story with a plumber client who had offered a 50% discount on a disputed bill. The customer agreed to pay the discounted bill but asked for a bill reflecting the discounted price. The plumber sent the bill, but did not note that payment due date, and the caveat that the price was only good for a certain time. The customer never paid, and a year later the plumber sent the account to small claims court. The judge ordered payment of the discounted amount, and the plumber had to accept half his fee, pay court costs and spend a day in court. 

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