Most pool cleaning and maintenance companies have a lot of clients. These clients most likely run the gamut from the great ones who pay-in-full and early or on-time to the ones who it seems like you always have to chase for money. Of the clients who do not pay, there are those who may never pay and that can hurt small businesses like pool cleaning and repair companies a lot. If your business has past due accounts, the cost of those can go way beyond just the outstanding amount. Here is a look at the real cost of past due accounts and what pool companies can do about it.
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The Real Cost of Past Due Accounts
The most obvious cost of having a client that has not paid their bill is the amount on the invoice. You and your company have provided a service and used man-hours and materials to do so. Not being paid for all of this can seriously affect a company’s bottom line.
In addition to the bill, the collection process itself has costs associated with it. Whether it is you personally, the person who manages the account, or an office manager who has to follow up to try and collect, that all takes time. The time that could be spent on the person’s core job which ultimately helps run and grow the business. They say time is money and time spent trying to collect on an unpaid bill loses more money for your company.
If a bill goes unpaid for weeks and months, you face a few, unattractive options. You can write the loss off, but that requires even more time and maybe even paying an expert to figure out if it makes financial sense. The other option is court. There are fees associated with that as well and once you put the case in the legal system, you open yourself up to things like countersuits which could cost even more in the long run.
So, to help contain the costs of past due accounts and keep your pool company on solid financial footing, what can you do?
How to Collect on Past Due Accounts
Debt collection for spa and pool companies requires a systematic approach, this includes assigning overdue bills to a collection agency and putting systems in place so that most bills never get that far.
Working with the right debt collection agency is important. You need to find an agency that understands both your business and theirs. The right agency will not only help you collect more outstanding debt in a timely manner but also do it in a way that is in compliance with all debt collection laws and does not alienate your clients.
An overly aggressive debt collection agency can hurt your company in multiple ways. First, companies that do not adhere to the Consumer Credit Protection Act and the Fair Debt Collection Practices Act can get your company in legal trouble that will cost even more money. Also, just because a client has a past due bill, does not mean you want to burn that bridge. That customer could turn it around and go back to be a valued customer in time. Even if not, you do not want to expose yourself to the damage negative word of mouth or online reviews could do to your business. That is why you want to make sure you work with an ethical debt collection agency that has your company’s best interests in mind.
Putting Systems in Place
Instead of wasting time and money chasing past due clients, there are a few other things you can do in addition to handing over past due accounts to a debt collection agency. Requiring that customers pre-pay for service may work in some cases, especially if it is a recurring service. Also, requiring a credit card on file that will only be charged if the payment isn’t received by a certain date can help as well. Finally, setting a well-defined line where you stop a client’s service or stop doing business with them entirely will help you create the most reliable client list you can.
Small business owners cannot afford to not be paid for their services. That is why swimming pool companies need to put systems in place to be in the best position to be paid-in-full and on-time. When this doesn’t happen, turning the accounts over to an ethical debt collection agency is the best way to make sure you are paid what you are owed without damaging your company’s reputation.