 |
Email to Friend |
 |
Print |
|
When you turn the account over to collections, you have "sold"
the account to them. We do not recommend you pay any fees up front, but rather
choose an agency who will collect on a contingency basis. If they do manage to
collect an account, they receive up to 50% of the money. So, if someone owes
you $500 and it is collected by the agency, you would receive a check for
$250. The account would then be considered paid in full. An agency may decide
to sue the debtor and all costs for this would be covered by the agency.
Sometimes the agency will garnish a debtor's pay check until the debt is paid
in full. Most agencies worth their salt have a representative that works
directly with you to explain their procedures. As with any business, it is
important to check the collection agency out with the Better Business Bureau,
Secretary of State or other area businesses who may be able to shed light on
their credibility. Do not use a collection agency from out of state. Stick to
the locals.
Take it to court yourself:
You should understand what is expected when you use the legal system. You may
hire your own attorney or go to court by yourself, depending on the amount of
the debt. ALWAYS be completely prepared before you walk into court. Be
professional. Do not become angry with the debtor. You would be surprised at
what some businesses have done to the debtor because they were upset. It is
time consuming, so unless you or one of your staff is trained in this area,
you may want to use a collection agency instead. But, with some proper
training and organization, you will be able to manage quite nicely on your own
(as always, consider the time involved and the trade-off for more productive
activities, such as generating new business, that you could be pursuing.)
Much of the nastiness of collection can be removed by having a clear policy
and procedure set in your credit department. Take the time to do that and you
should easily have 98% of your clients paying on time. If you don't set clear
policy, you'll soon regret it. The person who is "selling" the
product, should NOT be the person "collecting" the debt. It's too
much of a conflict. If you're a very small business and do not have separate
personnel, you may just want to use a collection agency if all other attempts
within that first 120 days fail.
|
