|
|
Cause and collect
1 Oct, 2008 By: Justin Berg Landscape ManagementDebt collection for a small business poses many challenges. Many owners are hesitant to get aggressive in debt collection and try to avoid sending customers to collection agencies.
 |
The concern is using a collection agency would alienate customers and leave their relationship permanently damaged. Others, simply stop serving the customer and write off the debt. Many small businesses simply lack the manpower to chase overdue debt.
To increase accounts receivable by improving debt collections, it is necessary to act early on debt resolution — as early as 30 days past due.
Early intervention, though best, is not always feasible for small businesses because it requires a near around-the-clock work force focused primarily on a company's bottom line. Landscape companies unable to pursue bad debt in-house can turn the process over to an outside source.
An effective debt collection agency works toward a company's success by acting early and treating customers respectfully. These methods improve profitability by increasing the volume of outstanding debts collected and keep customers in the process.
Debt collectors who act early in conjunction with a respectful mail-based system have greater success in collecting past-due fees. A written demand in the mail sent early, with a bold due date, gives customers a tangible and concrete request to resolve past due accounts. This kinder, less-threatening approach leaves customers feeling like they are working with an ethical company that treats them with respect.
Customers are more likely to respond to a written appeal than phone calls they often interpret as rude or abusive. It also allows your business to keep relationships with your customers friendly — an objective third party is handling the issue using their expertise. This also allows you to focus on your core business responsibilities.
Agency as a partner
Landscape companies looking to increase profitability and improve methods of collecting outstanding debt need to be particular when choosing a debt collection agency. An effective agency follows a business model that looks to retain customers and has your company's best interests in mind.
If your business is having difficulty collecting outstanding debt from customers and is also struggling to find the manpower to chase down monies necessary to keep stay afloat, it is time to find help. Remember, even reputable companies and consumers run into financial difficulties — and it is important to get help as soon as possible. A successful agency offers methods that are imperative to helping your business see a dramatic increase in your accounts receivable while also treating your customers with respect.
 |
One issue most landscape businesses looking to hire a debt collector must consider immediately is whether they can even afford to get help. In the collection industry, it's not unusual for 33% of the collected to go the agency for each account. This is too much for the average small business owner to pay.
Debt collectors who offer a flat-fee system have proven to be effective and affordable. A flat-fee agency typically charge landscape companies an average $10 to $15 per account, regardless of the dollar amount being collected, which in turn, means more money for the businss. This system makes it affordable for more small businesses to hire collection agencies.
Another feature to consider when looking for a debt collection company is the issue of full disclosure. An agency that gives clients the ability to manage their accounts receivable process through a Web-based system saves time and money in managing debt collection. A Web-based system also speeds the debt recovery process and strengthens the early intervention approach.
The next level
When a customer with outstanding debt ignores written requests for payment, typically numbering five, and debt goes unpaid for more than 90 days, it is time for a business to step up measures.
Early intervention, followed by more aggressive approach when requests for payment are ignored, is proven effective. After 90 days, a collection agency should begin phone calls to ensure customers are aware of the urgent need to pay their bills.
When making calls to pursue overdue payments, an agency will see more successful results when they use an educated team adhering to core values and treating clients with respect. When treated with diplomacy, more customers are likely to respond and pay overdue debt.
1 2
Please send any technical comments or questions to our webmaster.