Businesses are now facing an increasing number of clients requesting credit in order to purchase products and services. What makes these requests especially challenging is the economic slowdown that we are experiencing not only here in the United States, but across much of the industrialized world.
The accountant for these companies face a dilemma: Should they try to collect from these debtors on their own or engage the services of a professional debt collection agency? Unless the accountant is an expert on collections, it is in their client’s best interest to reach out to a collection agency as soon as possible.
Timing is very important when dealing with a delinquent account as every day that passes, makes collecting on this debt more difficult. Once a debt collection agency has been hired to follow up with the debtor, they will issue a formal demand letter. These agencies are experienced and understand the legal options of what can and cannot be done. The sooner action is taken the more likely the debt will be paid in full.
Something many people do not realize is how expensive servicing these delinquent accounts can be. The business that provided the credit must sell more products and services to offset the losses they have incurred which can be difficult especially in a bad economy. This is why it is extremely important to recoup as much of the outstanding debt as possible.
The majority of professional collection agencies work on a contingency basis which means they only receive compensation when the debtor makes a payment. Most agencies charge a percentage of the money received which can be negotiated before any debt recovery attempts begin.
An important consideration when looking for a debt recovery company is their reputation. The clients who have not paid their debts may one day choose buy from your company again. However, if the collection agency used does not behave in a professional manner it could have an impact on the reputation of the company that hired them and may subsequently fragment your clientele base.
When searching for a debt collection agency, ask them for testimonials from clients they have assisted in the past. By speaking with these former clients, an accountant will be able to make a well informed decision. If a collection agency is not able to provide testimonials they may not be the best choice. Since an accountant’s time is very precious they can focus it on ensuring their company is managed properly while the professional collectors can help recover as much money from the outstanding debts as possible.
Be Great,
WF
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