No matter what the size of your business is, positive cash flow is a crucial element, which means that collections should be one of your top priorities. At the same time, collections is a process that makes a lot of people uneasy, meaning that they sometimes procrastinate on doing it in favor of other, more pleasant duties. For many businesses, employing commercial collection agencies is the answer.
First of all, phone calls from commercial collection agencies are often enough to get a slow-paying client to send a check. Existing clients may take advantage of their good relationship with you and drag their feet as long as possible, hoping to trade on your goodwill. Calling in a professional debt collector shows them you mean business.
Secondly, people who work for commercial collection agencies do this job and this job only for a living. They know how to push your clients’ buttons in order to get them to pay, and they’re very persistent. In contrast, an in-house collections person may put off collections calls because they’re unpleasant, be content with leaving a message on voice mail or be susceptible to your clients’ excuses.
Commercial collection agencies have more clout with clients than in-house debt collectors as well. Chances are if your client isn’t paying on time, he or she has major cash flow problems and is playing triage with bills. The vendor who shows a serious commitment to debt collection by hiring commercial collection agencies is the vendor that will get paid first when there’s not enough money to go around.
To this end, it helps to interview current clients of commercial collection agencies to find out how satisfied they are with the vendor’s services. If the agency can point you to clients who have used their services for years it’s a very good sign, especially if they’re in industries that are aligned with yours.
Commercial collection agencies in most cases are not paid until they collect; at that point they receive a percentage of the recovery. In this way, they can actually be cheaper than using in-house collections, because an employee doing collections is taking time away from other work that he or she could be doing.
Commercial collection agencies are more effective at the collections process because they’ve seen and heard it all. They know how to recognize the patterns of debt avoidance, and don’t allow clients to emotionally manipulate them, which can be a problem if you’re handling collections yourself.
Commercial collection agencies know how to get the evasive person on the phone and get them to commit verbally to making a payment. Once clients have made a promise to pay they are a lot more likely to follow through on it. Using commercial collection agencies is simply a superior way to handle slow payers for any business.
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