How many reminders should you send before engaging a collection agency?
Posted on 11th November 2022 at 11:24
It probably won't come as a surprise that the most typical cause for late payment is your customer doesn't have the money to pay right now after sending hundreds of emails and making thousands of phone calls. Most of the time, if you provide them with a workable payment schedule, they'll return to your good graces within a few weeks.
According to statistics, sending a customer to debt collection before their account is 90 days past due is the best course of action. Remember that if you first gave them 30-day terms, they have already had access to your funds for 120 days! So there is little doubt that debt collection is the right course of action after 90 days, which is enough time to undertake a thorough credit control process. It makes sense to send a reminder if a customer doesn't pay by the due date. The legal deadline for sending this reminder has been established. To improve the likelihood of achievement, the appropriate time is essential.
It's a significant choice to send a past-due account to collections. Should you manage a client's debt yourself or refer them to collections?
Below are some things you should consider before sending a report to the collections:
Wait at least 90 days after the due date for payment before sending a client's unpaid invoice to collections.
It would help if you took action to collect payment yourself, such as phoning the client and sending debt collection letters, before referring a non-paying client to collections.
You should refrain from calling the debtor at work, speaking with them if they have an attorney, and threatening legal action while the debt is being collected.
Sending someone to collections is a choice that needs to be carefully thought out. Federal law controls how you can and cannot try to collect a debt and how you can use collection firms.
Moreover, below are some steps to take before sending someone to collections:
Phone the creditor
Send letters to collect the debt
Send a new invoice with late fees attached
Offer a compromise
Obtain a small claims court date
Employ a lawyer
It is simple to decide to assign your accounts to your debt collection agency if a customer refuses to abide by the terms of your agreed-upon transaction. There's no need to put yourself through the hassle of having to collect from a late payer or even just trying to get in touch with a mysterious customer.
Maintaining a positive reputation with your clients is crucial for your company. This also holds for past-due or lapsed clients. Relationships between the debtor and your company are essential when engaging a collection agency.
You could want to investigate the cause of the past-due account if, for example, your company has a good and long-standing connection with the customer and their delinquency is recent. It can be because of a medical condition, financial constraints, or unforeseen circumstances. Maintaining customer relationships is crucial for a business.
If you need help our debt collection agency team can assist you anytime.
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