Dealing with late or non-paying customers is an unfortunate reality for many businesses.
While you want to maintain good relationships with customers, you also need to get paid for goods and services rendered. At what point should you escalate matters and bring in an experienced collections agency?
Knowing when to hand off seriously late accounts for collections can be a difficult judgment call. On the one hand, you don’t want to be overly aggressive and jeopardize a customer relationship. On the other, you want to recover what you’re owed in a timely manner. Striking the right balance is key.
Is it Time for a Collections Agency?
How do you know when it’s appropriate to loop in a reputable collections agency to step up recovery efforts on a late account? Here are some telltale signs.
The Customer is 90+ Days Late
You’ve likely exhausted reasonable in-house efforts once an invoice is over three months past due. At this stage, customers need an additional push. Lockhart, Morris, and Montgomery (LMM, Inc.) can help you prevent past-due accounts from impacting your bottom line through ethical and compassionate processes.
The Customer Ignores Calls and Letters
You’ve tried to keep it civil and extended calls and letters to the customer for payment. However, if standard reminders and requests for payment go unanswered for an extended time, a customer likely needs more persuasive measures.
Broken Promises of Repayment
If customers repeatedly commit to paying by a certain date and fail to follow through, they likely need an incentive in the form of third-party consumer collections. We can guide them through the process with a friendly hand and let them feel comfortable about repayment and shedding the discomfort that can come with the situation.
Your Internal Resources Have Taken a Hit
Customer debts can quickly impact your bottom line. If considerable staff time and effort is being spent unsuccessfully collecting on an account, offloading it to a collections agency is prudent.
The Right Way to Bring in an Agency
Once you’ve decided a collections agency is needed, bring them on board correctly. Take some time to research agencies that work in your industry. Not every agency covers all collections, so you want to ensure you team up with an agency with industry solutions that can help you.
Once you have a collection agency that has a process that aligns with your collection philosophy, brief them fully on your customer’s situation, your collection attempts, and your expectations for the collection process results.
During the early phases of collections, expect your agency to send a notice and reach your customer by telephone. It shows you’re serious about settling the account.
Make it clear to the customer that you’ve brought in the agency and keep authority over settlement decisions.
Before you Reach Out to a Collection Team…
While collections agencies can be effective, you want to ensure you have all your ducks in a row before starting the official third-party collections process.
Selecting a collection agency with dedicated staff like the agents at LMM, Inc. is key. We ensure all our agents know about any account they work on, and every agent is well-versed with the FDCPA, FCRA, Reg F, HIPAA, and other relevant collections laws and regulations.
Also, ensure you have all the documentation surrounding the debt or financial contract. It’s essential that you can legally pursue with a collections team before taking action. Also, while you’re focused on the legalities, examine local laws that could limit collection practices in your jurisdiction.
Settle Severely Late Accounts With LMM, Inc. Today!
While handing off seriously late accounts to collections should be an option of last resort, it is sometimes a necessary step to getting paid.
Working with a reliable, reputable team like LMM, Inc. can ensure your account is handled correctly, respectfully, and quickly.
Whether you are collecting on an extremely past due account or just need to settle payment with steady customer-facing financial bad luck, our agents are always ready to help. Contact us today to learn more about our services.
