Hospitality industry (which includes Hotels, Airlines, Rental Cars, Restaurants, Catering Services and Travel Portals), frequently face the problem of mounting accounts receivable. This could be due to booking disputes, unpaid commission invoices, invoice corrections, check declines, credit card reversals or denials, property damages, cancellations, billing disputes and denial to pay for the facilities used.
Collections in the hospitality industry can be both Consumer (B2C) and Commercial (B2B) in nature. It is very important to select a collection agency which has adequate experience in recovering money from past-due accounts in the travel industry. Their demand letters and collection calls are designed to achieve maximum recovery in a diplomatic way, yet following a firm approach.
Experienced collection agents are very well aware the importance of maintaining the creditor-debtor relationship. They spell out the importance and incentives for paying, and also the consequences of not paying. In case of consumer collections it could be reported to the consumers’ credit report. In case of commercial collections it could mean a lawsuit.
Relying on your untrained in-house staff for collections can not only be inefficient, result in lower recovery rates, but most importantly they are generally unaware of federal and state laws involved when recovering money from a debtor, that itself can result in counter-lawsuits.
Collection agencies are experts in recovering debt. Not just the hospitality industry, they have experience in collection money from virtually every industry out there, hence they know how to tackle with all those excuses. If the debt is not recoverable in one go, they will put the debtor on a payment plan.
There is no point in writing off the debt which is hard to recover by your back-end staff, when a collection agency can likely recover at least a part of that money. To get maximum out of a collection agency follow these two thumb rules
1. Transfer your accounts to a collection agency after no more than 90 days of non-payment. If someone has not paid after 90 days, the likely good of them paying you directly goes down significantly.
2. Whenever requested by a collection agency, provide the copy of invoices or the relevant paperwork promptly that proves your financial claim.
Debtors take collection agencies very seriously and are more likely to pay, verses when the bills were being raised by in-house staff on company’s own name.