Automotive repair and body shop garages constantly face issues related to accounts receivable. Whether it is because a customer did not fulfill his obligation to pay or a delay/rejection of claim by an insurance company. Past due accounts can quickly erode profits of an automotive workshop and even interrupt the smooth running of the facility.
If a Automotive workshop on a 20% profit margin, say 5% of their customers do not pay, then effectively 25% of their net profit is gone. Actually collecting money from existing customers is more important than getting new customers.
Apart from time required to generate new business, an automotive workshop faces many challenges which include increased competition, certification requirements, integrated vehicle technologies, limited number of skilled workers, paperwork and higher expectations for speedy repairs despite slower reimbursement process by the insurance companies.
Relying on in-house staff which is not properly trained to collect the debt can be ineffective, time consuming and costly. Transferring an account to a professional collection agency will not only reduce the burden of staff, but even result in higher recovery rates. Debt collectors are experts in collecting debt, after all that is what they on every work day. They make sure that the debt collection rules and regulations specified by the Federal and State governments are followed, minimizing the chances of a counter-lawsuit.
A collection agency will also do advance Skip Tracing, which helps to locate a debtor in case he has shifted from this residence. Services offered by collection agencies are usually diplomatic, but can be slightly intensive if required. Two step collection process offered by collection agencies is perfect to start the diplomatic process initially and then use debt collectors or filing a legal suit to put more pressure to settle the account. Collection agencies can also report the debt to Credit Bureaus if you request them to do so. They drastically reduce the stress of debt collection for the owner and the staff.
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