Since the beginning of the economic downturn several years ago, many companies have been trying to do more with less people as a way to compensate for depressed sales and increased bad debt. Often times, this creates a work flow gap, especially in the accounts receivable department. As staff count decreases, companies quickly reach a point of diminishing returns where there is not enough staff to adequately cover all the tasks required to meet internal credit and collection policies. As a result, accounts that should have been recovered in-house prior to going to an agency age past the point of collectability and cause a greater loss of profit.
Pre-Collection Services to the Rescue!
Quality full-service collection agencies now offer pre-collection services designed to help companies in this situation. Some agencies offer solutions such as first-party calls and letters designed to appear as though you made the call or sent the letter. First-party phone calls can be positioned as a soft reminder for ever-so-slightly past due customers to prompt them to pay without having to resort to full blown collections, thus preserving the relationship between you and your customer. The costs associated with these types of services are typically less in most cases than companies that hire and train their own internal staff.
In addition, many agencies offer free pre-collection services designed to assist with in-house efforts, such as 10-day final demand letters. When you’re looking to improve your company’s bottom line, cutting out the cost of printing, mailing and monitoring demand letters can be substantial! In addition, some agencies offer access to a database of previously placed debtor accounts to help in your decision making process for past due accounts. Think of it like a credit crystal ball for past dues that can help guide you when you’re on the fence of whether or not to place a company for collections.
Take the time to reach out to your agency and ask what they can do to help. They very likely offer services you might not have known existed that can quickly improve your bottom line!
We want to hear from you!
What pre-collection services do you utilize, or have you utilized, that you find effective? And have they helped your department’s operations and processes run more smoothly? We invite you to share your thoughts in the comment section below!