Hospitality industry (which includes Hotels, Airlines, Rental Cars, Restaurants, Catering Services, Staffing companies 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 crucial to select a good 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.
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Experienced collection agents are very well aware of the importance of maintaining a good creditor-debtor relationship. They spell out the importance and incentives for paying, and the consequences of not paying. For individual collections, the unpaid amount can be reported to his credit report. For commercial collections, it could mean filing a lawsuit.
Relying on your untrained in-house staff for collections can not only be inefficient, stressful and expensive, it will also result in lower recovery rates. Most importantly, in-house employees are generally unaware of the ever-changing federal and state debt collection laws, that itself can result in counter-lawsuits. They are also not fully prepared to handle all the excuses and problems involved in debt collections.
Collection agencies are experts in recovering money from all kinds of debt. Not just the hospitality industry, they have experience in collecting money from virtually every industry out there. They know how to tackle all those debtor excuses. If it is not possible to recover the debt in one go, they will put the debtor on a payment plan. Due to the nature of hospitality’s industry client base, your collection agency should have resources and license to accept debts nationwide.
There is no point in writing off the debt that 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 in 90 days, the likely-hood 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 far more likely to pay, versus when demands are raised by your in-house staff.
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