If a debt is allowed to go unpaid and uncollected for 90 days or longer, the chance of being able to successfully recover the money owed can be greatly diminished, as the longer a debtor goes without any pressure to pay, the more they will start to feel as though they have gotten away with not paying for the product or service you provided.
When to Use a Collection Agency – Follow a Schedule
Determining when to use a collection agency is often a matter of personal preference, with some business owners opting to follow a rigid schedule whereas delinquent or unpaid accounts are turned over to a collection agency the moment the debt reaches a certain stage of delinquency, such as 30, 60 or 90 days past due, regardless of the amount owing or the
debtor's individual circumstances. There are several important benefits of following a schedule.
Firstly, following a schedule for turning accounts over to a collection agency eliminates the need for guesswork, which enables you and your staff to focus on your core business, rather than debating the need for collection on a case-by-case basis.
Another benefit of following a schedule is that by simply using the calendar as a guideline for turning over accounts to a collection agency, you can avoid any accusations that you are not being fair, since all bad debts, regardless of the amount or other circumstances will be handled in the same manner.
When to Use a Collection Agency – Follow Your Instincts
For some business owners, following a schedule may not be appealing for several reasons. For example if you are concerned that following a schedule may result in sending some accounts too late or too early, or if you feel each account should be looked at individually and handled based on other variables apart from length of delinquency then you may be better suited by following your instincts.
Following your instincts when determining when to turn an account over to a collection agency can yield great results if you find that your natural instincts are accurate enough to make the right decision a majority of the time.
Factors that may trigger you to act on an unpaid account may include the amount of the debt, lack of or poor communication from the debtor, claims from the debtor that they do not owe the amount, claims from the debtor that they are unable to pay or unwilling to pay the amount they owe you or any variable that causes you to feel that it is necessary to immediately turn over a bad debt to a collection agency and not delay recovery any further.
Collection Agency – Resources:
Collection Agencies List