Accounts receivable for Laundry and Dry Cleaning Service industries is quite common and their back-end/collections team works closely with their accounting department. Hiring an in-house accounts receivable person, even with a prior experience in collections industry is usually not all that effective because collections is still being done under the name of your Laundry company instead of a professional collection agency.
Fact: Customers are extremely concerned when collections are being done under the name of a collections agency, not so much when they are being done by a Laundry company.
Additionally, collection agencies enroll for expensive “Scrub services” for “Change of Address”, “Bankruptcy” and “Litigious Customer” check. Enrolling for these services for a standard entity like a Laundry Company is not practical because these Scrubs turn out to be too expensive per account.
Creating internal aging reports, monitoring accounts for delinquency and followup with overdue invoices works well for the first 90 days, beyond that there is no point in pursuing recovery under your own name. If a client has not paid in 90 days, what is the possibility that they will pay any time soon ( or ever).
Collection agencies are licenced and bonded, means if a counter-lawsuit arises, their insurance policy almost always covers this counter-lawsuit and damages filed by the client. They keep their staff up to date with constant changes in collection laws, something which an in-house employee of a Laundry company cannot keep up, because he works pretty much in solitude.
Delinquent customers are actually fearful of an account getting transferred to a Collections Agency. They are concerned that their account could be reported to a credit reporting agency and more. For accounts with higher balances, a collection agency will likely forward the account to one of their national network of attorneys to file a lawsuit.
You cannot win a football match by hiring a single player, you need a full team with varying roles to achieve the desired results. A Collections Agency works like a team with every department playing a different role.
In short, an in-house staff has little chance to compete with the recovery rate that can be achieved by a collections agency. If you account the salary of your in-house employee, printing costs, benefits, mailing, followup and all the hidden costs, a collections agency turns out to be a lot cheaper.
Collections agencies have been recovering money for their clients for decades, almost no one can beat the their efficiency and cost of collecting debt.
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