How to Get the Most from Your Collection Agency

So you have made the decision to use a collection agency. You have picked one from the long list of daily messages and calls you receive from the many sales personnel that call you and you’re about ready to begin placing accounts. And now you are asking yourself what things you should consider when deciding who to place.

Some of your choices will be obvious. The accounts that have been written off or are about to be written off are definitely the first to go. But who’s next?

Some of the criteria that you may want to consider might, at first, appear counter-intuitive. For instance, would you want to place a customer in collections with whom you have been doing business with for years? Would you want to place an account that just reached 30 days past due? What about that HUGE receivable?

Believe it or not, these might be the customers that you want to place and the sooner the better.

Consider the things you already know:

The longer you “sit” on an account, the less likely it is that your customer will pay you in full or pay you at all. Your customer is not paying because they have made a choice to allocate resources to other endeavors. In most situations, this is the beginning of a spiral downward for the customer and cash flow is not going to get any better. It will continue to worsen until the phone is disconnected or you receive the dreaded bankruptcy notification. 

By the time your gut is telling you this customer may be in trouble and that you should refer them to the agency, the likelihood of recovering money from this customer is much lower than it was when they were 30 or 60 days delinquent.

In order for collection agencies to remain viable commodities in the market place, they must learn to read the economy, develop strategies that enable them to stay in front of developing trends, stay well versed on the ever-changing laws governing their business and remain flexible in the types and levels of services they offer their clients. Gone are the days where tough talk and persistence were the rule and the way.  Today successful collectors and agencies are multi-dimensional experts in the growing and diverse world of accounts receivables management.

Discuss with your sales representative the many different facets of the ARM business and strategies that can be put in place to protect your assets. Twenty years ago it would be unheard of to place a long term customer with an agency when they reached just 30 days past due. In today’s market, your agency can tailor a strategy that strengthens the bond with your customer as opposed to weakening it. Your agency can perform "soft touch" audit approaches to test the waters with these customers, perform investigations providing details on the financial stability of large customers exhibiting signs of a troubled company and coax payment from customers who seem to be falling into the 30 or 60 days past due bucket a little too often for your comfort.

The best collection agencies that exist today have evolved into account receivables management companies. They are your partner in business and are honing their skills to ensure maximum recovery of your most precious asset, your money, while allowing you to maintain an ongoing relationship with your most needed asset - your customer.