Simply writing-off the amount that is past due is a common approach among several businesses. We see this as leaving money on the table.
The primary reason for not following up on receivables is that most businesses are short-staffed, and their staff have little or no time left after their primary job responsibilities are completed. Therefore, just after a few initial follow-ups, they let go of their debtors.
The cost of hiring a dedicated employee to recover bills usually does not make sense because his own employment costs are often equal to the money he may recover. Then why even take this headache?
In such scenarios, it may seem evident that businesses should hire a collection agency, but they often do not. Here are the main reasons for not hiring a collection agency and sending unpaid accounts to them.
1. They are not sure which collection agency to hire. They are fearful that the involvement of a collection agency may somehow have a negative impact on the company’s reputation. This perception is not entirely correct because several collection agencies have an amicable, respectful, and diplomatic way to recover the debt without harming your company’s reputation. Always go for a collection agency that has nationwide coverage.
2. Costs associated with hiring a collection agency. Definitely, there is a cost of hiring a collection agency, but those costs are minuscule compared to the returns you can get.
3. Extra time will be needed to work with a collection agency. Although it’s true, you do not need more time than you already spend trying to collect your unpaid bills yourself. Therefore, even though you may be short-staffed, you do not need more people to work with a collection agency.
4. Data security of your customers. This is a pronounced concern, what happens when you share your data with a collection agency, will it be kept securely or not?
This is a very genuine concern. You must ask the collection agency if they have a SOC security certificate, is HIPAA compliant, and if they have vendors located outside the USA. These simple questions can address your data security concerns.
There are several other reasons. However, the number one reason why businesses are so unsuccessful with their accounts receivable is that they are short-staffed. Sending accounts to a collection agency once your B2B or B2C accounts are over 60 days past due will result in phenomenal recovery results.
Need a collection agency that is secure, amicable and easy to work with: Contact us