Friday, June 26, 2009

It takes time to collect...

It takes time, communication and hard work, to get great results from a third party collection account

Last week, a new client called me to discuss her account.

“I have to tell you that I am a little unhappy about how long it is taking your company to collect from those accounts I gave you a few weeks ago.”

“Well,” I asked, “Did you talk your collection manager?”

“Sure I did.” she said. “She told me you guys were making progress, but it has been three weeks already and I have not seen a dime yet! She keeps asking for more information.”

When you hire a third party collection agency such as ARI, it is very important at the outset of the relationship that you have realistic expectations about the collection process.

Like many other cases, with this client, we had only begun the calling process and had just sent a letter –and she was already calling in for status.

My client, who was a startup business owner and new to the collection process, had the wrong idea that once she handed over her receivables to our company, that it wouldn’t take long before the cash would start rolling in.

In fact, when she handed over her accounts receivable, much of the information about the debtors was incomplete and the amounts to be collected were inaccurate.

The collection of bad debts can be a detailed process. To do it right, it involves time, research, and persistence on behalf of the third party collection agency.

An effective third party collection is an actual process that takes research and planning to ensure success. The information must be accurate.

We need to know basically the debtor’s financial life story so that we can be effective in negotiating the payment.

Therefore it can take a few business days just to work up a file before we begin communicating with the debtor.

So I explained to my client that the day she placed her accounts with us, we started a step by step process that involved a systematic review of the accounts and the building of a specific collection plan.

I also told her that it could take months to achieve the results she was looking for on some of the accounts. I emphasized that she had to continue to communicate accurate information about her accounts to her collection manager.

In order to help your third party collection agency be effective from the get go, there are three important steps a business owner should take in evaluating and setting expectations for collecting:

1) The amount placed with a collection agency must be as accurate as possible. Often, collection agencies are inundated with “inflated” receivables that can take more time to settle because they are inaccurate or even dishonest. If the amount to be collected is accurate, it is very likely that the account will settle sooner than later.

2) The business owner must establish a realistic goal of how much is to be collected and how long it will take- in other words, he or she communicate how much he or she is willing to settle for in cash on each debt to the collection manager handling the account.

3) The business owner and the collection agency must immediately establish a line of communication between not only with the account representative from the collection agency who establishes the collection relationship, but also the collection manager who is actually handling the account. It is very important for the business owner know that the collection manager is the one actually working to collect the debts. It is important to talk to the collection manager and feel trust and confidence in that person.

Have you recently taken the time to evaluate the status of your account receivables? Are you collecting on your accounts receivables or don’t you have the time to properly address them?

It may be time to outsource your accounts receivables to ARI. From the point invoice data is available, through the posting of cash received, ARI allows its customers to concentrate on their core business, secure in the knowledge that the Accounts Receivable portion of its business is professionally, accurately and securely performed.

For further information, please visit our website or call ARI Vice President Melissa Nash Andrews at 561-697-4911. You can also email her at today.

Melissa Nash Andrews is the Vice President of Accounts Receivable, Inc. and the author of “How to Get Paid On-Time, Every Time”

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