When do I use a Collection Agency? Part 1

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Aug16

When do I use a Collection Agency? Part 1

August 16, 2006

Know More: Bad Checks, Creating a Credit Policy, Credit Reporting, FAQs, I have past due customers, what do I do?, MIlitary Collections, Rent Collections, Skip Tracing, Small Claims Court, Using Collection Agenices, What makes a Good Collector?

Business owners ask me this question quite often. Some of them think if they have in house collectors or a credit manager they don't need a debt collection agency.

Unless you collect all the money owed to you with minimal effort and expense, you might not. Once you have spent to much time on an account and you are losing money trying to collect, you should place the account with an outside agency and write the debt off to bad debt. If anything is recovered, then it is just "gravy" and you can post the payments to bad debt recovered. Some other things to look for are:

The customer does not respond to the first invoice, keep an eye on this one!
Payment is not made on time.
The customer repeatedly complains about service, shipping, the product etc.
The customer claims he or she is not responsible for paying the bill.
The customers mail is returned or their phone is disconnected, or both!
The customer does not keep in contact with you and ignores your calls and letters.

REMEMBER: The longer you keep an account on the books, the less chance there is of collecting it. When in doubt, place accounts with an agency sooner than later.

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