Debt Recovery

Large clients often assign hundreds ( even thousands) of accounts to a collection agency in one go. This large batch is usually their past-due inventory accumulated over the years. 

Suppose a client submits a batch of 1000 accounts to the collection agency. These accounts are assigned to multiple debt collectors who will start sending collection demands or making phone calls to your debtors. All your 1000 accounts are acted upon in a matter of days. What happens next catches most clients by surprise.

Roughly one hundred concerned debtors will begin calling the client directly ( to pay, dispute the debt, complain, or other reasons). Although (in most cases) the debtor is directed to call the collection agency and not the client, a small percentage of debtors still call the client ( say 10% of the total assignments).

The front-line person in the client’s office receiving these debtor calls quickly gets overwhelmed (at least temporarily. say for a week). This high inbound call volume catches the client by surprise.

Although the client will collect a lot of money quickly, they will surely need additional hands to cope with these debtor calls and inform the collection agency about the payments they received for these accounts. You must also post an update in your internal accounting software (like Quickbooks).

There are two ways to handle this situation:

1. Before a client submits a large batch of accounts, they should dedicate more resources for inbound calls for at least a few weeks till the inbound call volume tapers down to a nominal level. This is the preferred approach.
2. Assign only 200 accounts to start with. This will keep your inbound call volume low, then increase/decrease the submission size the following week.

Customer payments get delayed all the time. It may not always be worrisome right away, but not having an accounts receivables strategy can be devastating for your business.

Consumers and businesses alike have ups and downs, and their financial situation can temporarily or permanently deteriorate. If you have outstanding AR from your customers, it is crucial to get paid on time before they prioritize other payments over yours.

Firstly, you must learn to overcome the hesitation of reminding your customer of a missed payment promptly. It is possible that it was just an oversight on their part, but there is always a possibility that they have a financial crunch. They could be owing other bills just like yours.

Secondly, there is nothing wrong with sending invoices twice a month, and a phone call to the concerned person will ensure that you have done everything to maintain a healthy AR. We prefer emailing the invoice, followed by physically mailing the same invoice ten days later, followed by a phone call to the concerned person after another ten days. It means in 1 month you would have contacted them thrice (by email, mail, and phone call). The process should repeat for at least 2-3 months until you get paid.

Lowering accounts receivable is essential for improving cash flow and reducing the risks associated with late or non-payments. A proactive approach involves implementing strategies that will reduce the amount of money owed to your business by clients or customers before it becomes a problem. Here’s how you can be proactive in managing and reducing your accounts receivable:

1. Credit Policy Evaluation: Regularly evaluate your credit policy. This includes reassessing credit limits, conducting background checks, and analyzing the creditworthiness of new and existing customers.
2. Clear Payment Terms: Clearly state your payment terms on invoices and contracts. This includes the due date, late payment penalties, and any discounts for early payments.
3. Invoice Promptly and Accurately: Send invoices as soon as goods or services are delivered. Ensure that the invoices are accurate, detailed, and include all the necessary information for the customer to make payment.
4. Electronic Invoicing and Payments: Adopt electronic invoicing and offer multiple payment options, making it easier and faster for customers to pay.
5. Regular Follow-ups: Keep a consistent schedule for following up on unpaid invoices. Start with a polite reminder as the due date approaches, and maintain communication if the payment is late.
6. Maintain Relationship with Customers: Maintain a positive relationship with your customers. Understanding their business and any issues they may be facing can help in negotiating payment plans if they are experiencing financial difficulties.
7. Train Staff in Accounts Receivable Management: Ensure your staff is well-trained in accounts receivable best practices. They should be knowledgeable in your policies and be able to handle communications with customers effectively.
8. Monitor Accounts Receivable Aging Reports: Regularly review accounts receivable aging reports to identify overdue accounts. This helps to prioritize collection efforts and spot trends that may need attention.
9. Offer Early Payment Discounts: Provide incentives such as discounts to customers who pay their bills before the due date.
10. Implement a Dunning Process: Establish a structured communication process that escalates in tone and urgency as an account becomes more overdue.
11. Outsource or Utilize Collection Agencies: For severely overdue accounts, consider utilizing the services of a collection agency or outsourcing the accounts receivable process. Also, assess your dependency on this customer and prepare for an alternate strategy. If your invoice is 90-120 days old, I do not doubt that most of these accounts should be forwarded to a collection agency.
12. Regularly Review and Optimize Processes: Continually review your accounts receivable processes for efficiency. Make necessary adjustments based on what’s effective and what’s not.
13. Use Technology Solutions: Implement software that automates the accounts receivable process. This not only saves time but also minimizes errors and provides valuable data for analysis.
14. Cash Flow Forecasting: Regularly forecast cash flow taking into account your accounts receivable. This will give you a better understanding of your financial health and allow you to make informed decisions.
15. Document and Enforce Policies: Have a documented policy regarding accounts receivable management and ensure that it is consistently enforced.

By being proactive in managing your accounts receivable, you can lower the outstanding balances and improve the financial health and sustainability of your business.

 

 

 

 

It is common for collection agencies to charge an onboarding fee to their new customers. However, a few good collection agencies with nationwide coverage waive their setup fee regardless of the number of accounts you have for collections.

Contact us if you need a collection agency with the following features.

• No setup fee and no hidden charges. We guarantee it.
• Open-ended contract with no minimums and free credit bureau reporting.
• High collection rates and an easy-to-use online client portal.
• Offers both Fixed-fee service and Contingency-only based collection services.
• Cares about your reputation by not indulging in aggressive collection tactics.
• GLBA, FDCPA, TCPA and PCI compliant.  ( Obeys government-mandated rules and handles data securely)

With over 3000 collection agencies all over the USA, selecting a good collection agency can be a daunting task.

Selecting a mid-sized collection agency will ensure that you get adequate attention and that compliance with national and state laws is entirely followed.

 

Lumberyards Are Not Banks: Stop Financing Your Customers’ Projects

In the building materials industry, there is a brutal reality: Net 30 often turns into Net 60 or Net 90 without you agreeing to it.

As a supplier, you are operating on razor-thin margins. Industry data for 2024 shows that the average net profit margin for building material dealers often hovers between 3% and 6%.

Here is the math that keeps owners awake at night: If you write off just $10,000 in bad debt at a 5% margin, you have to sell an additional $200,000 in lumber just to break even.

You cannot afford to let general contractors (GCs) use your inventory as an interest-free loan while they wait on their draw. You need a recovery partner who understands the difference between a legitimate “shortage” claim and a stall tactic.

The “Dispute” Game: How GCs Delay Payment

We know the specific excuses you hear from general contractors, because we handle them every day. Traditional agencies treat every debt like a credit card bill. We treat lumber debts like construction disputes.

We know how to push back on the common “stall tactics” used in the lumber trade:

• The “Culling” Claim: The contractor waits 45 days to tell you that 20% of the framing package was “unusable” due to wane or shake. We demand the timestamped photos and the rejection notice that should have been sent upon delivery, not two months later.

• The “Phantom” Shortage: They claim the load was short five bundles of studs. We counter with the signed Proof of Delivery (POD) and GPS data from your drop.

• The “Pay-When-Paid” Bluff: GCs often tell suppliers they can’t pay until the owner pays them. In most states, this clause does not apply to material suppliers. We remind them of the law.

Collecting money for Lumber Companies Nationwide Contact us and start recovering. High recovery rates.

A Recovery Process Built for the Job Site

We don’t use a “one size fits all” script. Our 4-step model is designed to respect your lien rights and recover funds before they disappear.

Phase 1: The “Notice” (Flat Fee Protection)

• Cost: Just $15 per account.

• Strategy: We send official, third-party demand notices. This isn’t just a bill; it’s a signal that you are preparing to escalate.

• Why it works: It puts you at the top of the AP stack without costing you a percentage of the invoice. You keep 100% of the money recovered here.

Phase 2: The Lien-Aware Escalation

• Cost: $15 per account.

• Strategy: If the first notice is ignored, we turn up the heat. We verify your deadlines for Mechanic’s Liens and Bond Claims. We operate with speed because we know that once your lien window closes (often 90 days), your leverage drops to zero.

Phase 3: Contingency Collections (The Heavy Lifting)

• Cost: 40% of funds collected (No fee if we fail).

• Strategy: Our senior negotiators step in. We handle the “unconditional lien waiver” demands and negotiate payment plans for cash-strapped builders. We charge a fee only on success.

Phase 4: Construction Litigation

• Cost: 50% of funds collected.

• Strategy: If a builder has assets but refuses to pay, our network of construction attorneys is ready to file suit.

Why LBM Dealers Choose Us

• We Check Before We Chase: We provide Free Bankruptcy and Litigious Checks on every account. If a builder has already filed Chapter 7, we tell you immediately so you don’t throw good money after bad.

• We Protect Your Brand: The construction world is small. We recover your money firmly but professionally, ensuring you don’t get a reputation for being “impossible to work with” in the local market.

• Nationwide Reach: Whether you shipped a load across the county line or across the country, we are licensed to collect in all 50 states.

Q&A: Real Issues from the Lumber Yard

Q: Can you help if the material was stolen from the job site?

A: This is a massive issue. Contractors often try to refuse payment for material stolen after delivery. However, legally, FOB Job Site means the risk of loss transfers to the buyer upon delivery. If you have a clean POD, we enforce payment. The contractor’s lack of site security is not your financial loss.

Q: Do you handle Retainage disputes?

A: Yes. Retainage (usually 5-10%) is standard, but GCs often “forget” to pay it out months after the project is closed. We track substantial completion dates and aggressively pursue these “leftover” balances that add up to significant profit.

Q: What about “Moisture Content” disputes?

A: This is frequently a user error (improper storage on site) rather than a product defect. We know how to ask the right questions to determine if the lumber was left uncovered in the rain versus actually being delivered wet.

Stop Cutting Into Your Margins

You delivered the wood. You deserve the check. Stop letting bad debt eat away at your hard-earned profits.

Click here to Get a Quote and start collecting today.

Lumber companies often need professional help to negotiate non-payment cases and work with the legal team for lien processing and collection of delinquent accounts. These debts can be B2B and even B2C.

Let us accept the fact. The employees of the accounting team of lumber companies are not professional debt collectors. They do not have the required tools for debt collection or the time. Accounts that become 90 days past due have a very high chance of falling into that permanent delinquent status. Rather than waiting for a few months and writing off the debt, it is better to hire a collection agency on time and recover the maximum money possible.

A good collection agency should be an expert in your area and must provide references of other lumber companies they have served.

Business and medical professionals seeking to hire a collection agency always wonder if the agency they hire is ethical or if it may damage their reputation. 

Here are some valuable tips on how collection agencies can maintain a good reputation online and offline.

• Following Federal and State laws: A collection agency that violates government laws will get sued or penalized sooner or later. This violation can be all over the news, and this incident will remain in electronic news outlets for years. 
• Google Ratings: Checking Google ratings are the #1 place for almost everyone when shortlisting a collection agency. Asking your happy customers or satisfied debtors can improve your online reputation by many folds.
• Amicable collections: Using harsh, abusive, unfair, or deceptive practices to collect debts from your debtors can severely damage your reputation. 
•  BBB Rating: Although millennials may not care much about Better Business Bureau ratings, this is often quite important to people over 55. People in this group can be real decision-makers.
• Scholarships: Giving college scholarships, sponsoring a community event, and donating a small percentage of profit for a social cause, then publishing those events on your blog or press release can work wonders for your collection agency’s reputation.
• References: Positive references from existing customers and publishing them on your website can be very effective. Businesses may not believe what you tell them, but positive reviews from their peers are very impactful.
• Good recovery rates: Last but not least, if you recover more money for your customers, they will likely refer your service to their friends, who may also be looking to hire a debt collector.
• Be vocal about your compliance: Compliances like GLBA, PCI, HIPAA, and affiliations like ACA are essential to comfort potential clients.

 

Fed Chairman Jerome Powell is increasing the interest rates, which has triggered an economic slowdown. People have been losing jobs, the housing market has already slowed down, and we read news about job losses almost daily. Most economists believe that a recession is inevitable.

Impact of Rising Interest Rates on Consumer Debt

• Credit Card Debt: Higher monthly payments since they charge a higher interest rate.
• Higher mortgage and car loan payments.
• Everything around you gets expensive, including food and clothing.
• Job losses/layoffs.
• Higher electric and cable costs.
• People lose money in the stock market.

People tend to spend more money on bare essentials than pending bills like medical and student debt. 

The more you defer working on your overdue bills, the financial situation of your customers/debtors will deteriorate.

Your customer likely has other debts besides yours. Therefore, getting paid at the earliest should be your priority before they use their money on other necessities or decide to make other payments before paying you.

The probability of getting paid will decrease with each passing day, and your overdue AR should be your number one priority.

Need a collection agency that can quickly work on your outstanding invoices? Contact us