Operating a towing business or being a tow-truck driver involves considerable hard work and planning. Challenges of a towing business include paying for the tow truck mortgage, fuel costs, monthly insurance premium, repairs & maintenance of the truck, fatigue, marketing business on Yellow Pages or Google, dealing with disgruntled vehicle owners, poor driving conditions, accounts receivable, competition, business expenses, uniform and miscellaneous expenses.
Past-due accounts are a significant drag for towing operators. This hurts their cash flow and profitability. This situation arises because of dishonored checks, payment disputes, damages, or just because a car owner did not fulfill their obligation to pay as promised.
Without a clear, enforceable policy for payment collection, towing companies can have difficulty receiving payments for their services. Towing businesses, especially smaller ones, may lack the resources or expertise to manage accounts receivable efficiently, leading to cash flow problems.
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Tow truck businesses do not have an in-house expert to collect late payments while adhering to the federal/state collection rules and regulations that must be followed when recovering a debt. Not following these guidelines can lead to a lawsuit from the vehicle owner. To be honest, vehicle owners are usually not that serious when the employees from a towing company request them to make payments. However, all that changes when a Debt Collection Agency gets involved.
When a debtor (vehicle owner) gets that first written demand or a phone call from a Collection Agency, he knows that the matter has been transferred to experts. Dent collectors will continue to demand payments legally for a very long time and may take the debtor to court as a last resort. They are a lot more inclined to settle the matter. Collection agencies have subscriptions to various tools like “Advanced Skip Tracing“, which help them locate a debtor who has relocated due to genuine reasons or hide from his payment obligations.
Transferring an account to a collection agency after 60 days of non-payment is highly recommended for the towing business. This maximizes the chances of recovery and amicably resolving the matter. The three-step process followed by collection agencies switches from diplomatic collections to intensive collections as time passes.
Customers may dispute the charges if they feel the cost is too high or unfair, especially when they did not request the towing service directly (like in the case of parking violations or accidents). If a vehicle has been impounded due to legal issues, there may be delays or difficulties in receiving payment until the legal matters are resolved.
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