When you are operating a contracting business, there is a chance that your clients will refuse to pay an outstanding balance. Despite your best efforts, your only option may be to hire a collection agency in order to recover those past due accounts. The question is, when do you know when it is finally time to make that call?
Anyone operating their business on a contract basis should first and foremost have a clear accounts receivable strategy. Before providing service to a client you must consult/hire an attorney to make sure that your contract with customers is legally binding and specifies the consequences of late payments and late fees. However, even written agreements such as emails can hold your client responsible for paying you for your service. Whether they aren’t happy with the service or they simply don’t have the funds to pay you, here are obvious signs you need to hire a collection agency to help you recover your money.
No one wants to speak to a third party collection agency. There is a huge difference when collection efforts are made under your name verses when an expert debt collection agency contacts them under their own name. Debtors will dig deeper to get a collection agency off their back.
5. Your Client Is Stalling
Clients who want to appear as if they have intentions to pay off their debt will use stalling tactics. These are the clients who will repeatedly miss payment deadlines, write bad checks, or continuously dodge your phone calls and all sort of excuses. Once this starts happening on a weekly basis, hiring a collection agency should be your next step.
Some people may go as far as to make a formal complaint against your business. Whether this is done on a more low-level service such as Yelp or Google reviews, or they file a formal complaint against the Better Business Bureau (BBB), even though you know that your work was executed just fine. Clearly your client has decided to take an unprofessional route and at this point, it’s obvious they aren’t trying to pay you.
4. You Can’t Locate Your Client
In the beginning, your client may make empty promises to pay their outstanding balance. They may do this by actively answering your phone calls. But once it’s obvious that these tactics won’t deter your hunt to recover their past due accounts, they may disappear altogether.
If your client blocks your phone number, changes their email, or seemingly vanishes from social media, it’s time to hire a collection agency. An agency will have the resources needed to track down your delinquent clients so that you aren’t wasting any more time.
3. You Don’t Have Time and Expertise To Recover Past Due Accounts
The amount of time and energy it takes to persuade people to pay you is exhausting. It will take you emailing, calling, and sending formal letters on a routine basis. If you have a staff that manages these types of calls, that is daily manpower and employee pay that you have to manage just to recover past due accounts. And once a client has decided to block you from all forms of communication, it can be hard to track them down.
A collection agency (especially the more reputable ones) has the proper tools needed to track down clients, then send collection letters, make collection calls even take them to the court if needed. They will take that time off your hands and you can rest assured that someone is acting on your behalf to get your contract paid off. Keep in mind that most agencies will take a portion of the debt owed for their services, but usually, this is worth it in exchange for their rigorous efforts.
2. You Have Pending Bills For Your Own Contracting Business
When someone neglects to pay their balances, it puts a financial burden on your business and restricts your own cash flow. If you have your own outstanding payments that need to be paid on time, you may want to hire a collection agency as soon as possible. Even if you are not reliant on your customers paying on time, you never know when you might need the extra cash.
Instead of putting yourself at the mercy of your clients, an expert collection agency will be your best shot to get those payments started. Being sent to a collection agency is what will take a toll on your client’s credit, so they will be more inclined to start making payments.
1. You Can’t Afford Legal Representation or Don’t Have Time
Some contracting businesses instantly put out the threat of legal action once a client refuses or dodges their bill. While this route also works to recover past due accounts, it takes the time and upfront costs to pay an attorney. Instead of going this route, you can indulge in the help of a debt collector.
Some agencies work on a contingency basis, while others require a flat fee. You may want to consider using an agency over a lawyer if you don’t have a tangible contract with your client or if your client has moved. Agencies may have access to other databases that allow them to trace where your client relocated to (known as skip tracing). Do your research to see which option is the more viable and affordable for your contracting business.
Contact us if you need a Collection Agency with vast experience in recovering money for Contracting Business.