“We do all our own collections in-house. We write off our bad debt and take it as a tax deduction on our taxes. There are nothing a collection agency can do for me that I cannot do myself”
Really?
Small businesses are usually on a cash basis so there is NO “write-off” tax benefit available to them. Read more about that here. The money you are putting in the write-off column is doing nothing for you. It is not real money until it is in your bank account.
You absolutely should be trying to collect as much money as you can on your own. Your process should be consistent and streamlined – a few letters, final notice and get it out the door.
Focus is key, and a collection agency is focused on getting results for you. While you may have many things to look after during a busy day, your agency is focused on collecting money for you. Outsourcing your collection saves you time!
Much of a collector’s time is spend tracking down customers who have moved or changed phone numbers. This research, commonly called “skip tracing” is an art, putting the pieces of a puzzle together. In these days of social media sites like Facebook and Linked In, there is certainly a good amount of information online, but collectors have access to sources that would be costly or are unavailable to you. Collectors are trained in finding people, and finding assets – a skill that cannot be taken lightly!
The right collection agency negotiates on your behalf, and takes you out of the middle of a dispute. They can help you decide which files are best suited for legal action, and help you avoid taking the wrong files to court.
If credit reporting is important to you, your agency can also provide this service for you. However, as we have stated in the past, we believe the impact of credit reporting in getting you paid is overrated. Your collection agency has this as one of their tools, but a persistent effort of following up with your files should be their main focus.
What services do you expect from a collection agency? We would love to hear!
Also, please download our FREE “10 Tips to Minimize Bad Debt in Your Business”
