Utility companies are the backbone of every household in United States. Utility companies typically do not cut the supply, if a customer has failed to pay just a bill or two on time, this often results in a large number of accounts receivable for nearly all utility companies. Recovering money on time is extremely essential because these companies do not work on big margins, however they have a large staff and infrastructure to support.
The in-house staff of utility companies is generally not trained professionally to collect money from past-due accounts. Many agents may not be fully up to date with ever changing debt collection laws. Accounting staff will send a few reminder letters or even make a phone call, but they are not all that prepared to handle those diverse excuses which debtors come up with all the time, nor have the latest tracing and reporting tools which the Collection Agencies have at their disposal.
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Here are the most important reasons to transfer those accounts to a debt collection agency where the Electricity or Gas bill has been due for over 60 or 90 days.
1. Collection Agency letters really work:
When a person gets a reminder letter from a Utility company, it is usually not taken all that seriously. He probably his going through some financial trouble. He has possibly defaulted other bills too (like the credit card or medical bills), which may take a higher precedence over the utility bills.
This scenario changes when a collection agency takes over. A collection letter from a professional debt collection agency invokes a fear and responsibility in the minds of people. Collection agencies carefully craft their legally complaint demand letters and sends those at regular intervals, and their intensity keeps increasing. Customer understands that since the account is now in collections, there is no easy escape and a lot more collection activity is yet to come. Collection agencies are experts in collecting debt, so if money can be recovered they will recover it in one way or the other. Collection letters also work well when a debtor does not pick phone calls from an unfamiliar number, then letters are the only way to contact them.
If collection letters are not successful in recovering debt, accounts can always be referred to a slightly more intensive “collection calls” service. Who wants to be called by a debt collector, therefore people world rather clear their bill than to be regularly contacted by a debt collector.
2. Cost Savings:
Cost of sending five collection agency letters for a typical business is around $15, but since Utility companies have a large volume of past due accounts, they are able to get the same service for a lower price ( roughly $10 for 5 letters). It is impossible to beat this price, sending 5 letters utilizing own in-house staff: include postage, staffing, office leasing costs, time spent and overheads and it will cost no less than $50-$80 per account for 5 letters.
3. Skip tracing and Bankruptcy checks:
Collection agencies do advance Skip tracing on all accounts submitted to them. It means they attempt to get the latest contact information of a debtor. This includes finding the new address if he has moved away from the address on file. They also do a bankruptcy check to find out in case he/she is not liable to pay anymore due to bankruptcy protection.
4. Compliance! Adherence to laws when performing collections:
This is where the Utility Company staff really lags behind. Federal and State governments have rules and guidelines on how to approach a person for collecting debt.
The Fair Debt Collection Practices Act (FDCPA) is the main federal law that governs debt collection practices. Collection agencies staff is very well trained not to break any law when performing collections. This protects the utility companies from getting sued back and minimize lawsuits in which they often get pulled in and land up doing a settlement by paying money. Collection agencies are licensed and insured in case there is ever a legal action initiated from the debtor’s side.
5. Higher ROI and Performance Guarantee:
Collection agencies are extremely confident about their Debt Collection Letters service, most of them offer a guarantee to return at least twice the amount you invest in buying their Letters Service. This is a win-win situation for the utility companies. Not only the activity is done at a low cost, the investment is also backed by a guarantee.
6. Easy to use:
Most agencies have a 24/7 online portal to submit accounts, view performance reports or to stop service when the payment has been made by the debtor. Many agencies also have integrations or utilities with various billing platforms, like Quickbooks and Zoho.
7. Ease of payment:
Collection agencies accept payments in many forms, which a typical Utility company does not offer. They may also negotiate with a customer to pay the amount in installments. Collection agencies have many techniques to recover debt, handle debtor excuses and handling common debt collection challenges.
All collection agencies are not equal. It is important to select a collection agency which follows federal and state laws, has the license to collect in all 50 states and also beats other collection agencies in terms of performance and data security.