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 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.
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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. Dent collectors 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 help 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 time goes by.
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