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Show Me the Money - A Quick Guide to Knowing When to Engage a Debt Collection Agency

We have all heard that cash flow is the lifeblood of any business. It keeps the doors open, the bills paid and the stress down!

If your business is squeezed by a lack of cash flow then you might be relying on an overdraft or other loan to keep the doors open, which costs interest every day and eats into your profitability.

cashflow empty

It’s easy to get so caught up in your day-to-day operations that you forget about collecting overdue accounts.

I mean, let’s face it, many business owners hesitate to ask for payment from their customers because they do not want to upset the customer or lose the account.

Some might even turn a blind eye, keep supplying the goods or services and hope that they see the payment in their bank account without having to do the unpleasant job of chasing the customer up.

If this sounds familiar, the good news that you can implement a simple financial system for overdue customers that will get the cash flow moving again.

The first thing is to keep an eye on your accounts, so you know who isn’t paying their accounts. Depending on your terms of trade this might be a weekly, biweekly or monthly task.

final notice debt

Once you have your list, and you see accounts that have fallen outside 90 days – Act!

Contact your customer by either telephone or email and make a specific demand for payment. Advise your customer in writing that if no payment or contact is received within 48 hours - the account will be going to your Debt Collection Agency.

The most crucial part is if you make a threat you must follow through to the action. Most clients keep threatening in hope the customer will pay but unfortunately most do not pay.

In our experience, once the account is 90 days in arrears, action needs to be taken. Usually, a simple phone call will do it but if you have made attempts to collect the account by either phone calls, emails and your customer has not contacted you then alarms bells should start ringing. That’s when you need to take a strategic approach to debt recovery.

What is debt recovery?

Debt recovery is basically a method/process in collection of outstanding monies.

Here at ACS (ACS Debt Collection) we help businesses collect their overdue accounts and increase their cash flow by using our proven 48-hour debt recovery process.

The ACS Method

Our ACS team will find the best way to collect your outstanding accounts. We like to start with a 15 minutes Free Consultation so we can determine the best debt recovery strategy to fit in with your business.

When is the best time to use a Debt Collection Agency?

Once again, in our experience if the account is in 90 days and there has been no contact or part payment from your customer, then we advise the business owner to put a plan in action.

how to choose debt collection agency

How to choose a Debt Collection Agency?

This can be a big hurdle for many business owners. Maybe you’re lucky enough to be given a name by someone you trust but otherwise you’re taking your chances with google.

When you’re doing your research, there are a few things to consider before employing a debt collection agency. Even though some clients choose by price, I would suggest using the following guidelines to help your decision making.

  1. Check if the agency is licensed (Every agency and collection staff is required to be licensed. Refer to Police website under CAPI License)  
  2. Check how long have they been in business and where they are located.
  3. Establish what the agency will do for you and in addition check their terms + conditions.

What kind of information is required for collection of overdue accounts?

Every debt collection agency has their own method of collecting information from you. ACS provide a from that you will need to complete that gives us all the information we need to get started. The form can be located on our website.

ACS looks after their clients from start to finish and we offer our clients a 72% success rate in collecting debts. Depending on the amount to be collected will depend on how far we can take the collections, for example, our options for collecting a $200 account is different to collecting a $5,000 account.

We trust this information has helped you in some way that you can use immediately for your overdue accounts.

To recap

  • Set up a financial system on collecting overdue accounts.
  • Act on customer accounts that exceed 90 days
  • Be specific in your demands and act if no payment received.
  • Check your debt collection agency’s terms + conditions
  • Ensure you obtain as much information from your customers as possible.

Happy Collecting!!

This article was written by Sonia Ferlauto of ACS Debt Collection.

Sonia FerlautoSonia Ferlauto, the founder and director of ACS Debt Collection. Sonia created her business with the idea of making a difference in the debt collection industry. A male dominated industry that is known for being overweight and harassing bullies – her empire has been built into a young progressive company who is happy to take a ‘female approach’ to debt collection.

Our Award-winning, All-female team helps businesses collect their overdue accounts and increase their cash flow by using our proven 48 HOUR debt recovery process.

 

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