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 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 simply did not fulfill their obligation to make the payment as promised.
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 need to 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 payments are requested by the employees of a towing company. However, all that changes when a Debt Collection Agency gets involved.
The moment 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 and they will continue to demand payments legally for a very long time, and may take the debtor to the court as the last resort. They are a lot more inclined to settle the matter. Collection agencies have subscriptions to various tools like “Advanced Skip Tracing“, that helps them to locate a debtor who has relocated due to genuine reasons or to 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 resolving the matter in an amicable way. The three step process followed by collection agencies switches from diplomatic collections to intensive collections as the time goes by.
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