Some of our best tips for handling debt collections internally

There are several reasons why organizations of all sizes would be looking for a debt collection agency. You may be a small business and have reached the point where you’re tired of chasing down late and nonpaying customers. Or maybe your organization regardless of the size has limited internal resources to handle the task of getting your customers to pay on time.

Whatever your reasons are, you will want to find the best agency that can understand your needs, be a great fit as well as treat your customers fairly. Because after all, treating your customers with respect is something that you would do in all aspects of doing business with them. Including, trying to get them to pay.

We always recommend that organizations manage part of the debt collection process internally before reaching out to a third-party agency. Many times, when done properly, your accounts receivables can be beefed up with your internal resources. While you may need to ultimately hire a collection agency, taking these steps internally will prepare you if you do have to hand that debt off to an agency.

Maintain proper accounting records

Any size business should be maintaining meticulous records when it comes to accounting. You should be detailing any type of work that was supplied to a customer and those records should be kept in real-time. What’s even more important is detailing any type of changes or additional services a customer may ask for. For example, if you work in home improvement, you are dealing with changes every day. Document everything and make sure your client is in full agreement. Many times, this is where a financial dispute begins. Put everything in writing.

Analyze your internal resources and staffing

It’s a good idea to analyze what you have for debt collection needs and how your internal staff can support that. If you have an ongoing need for debt collections and you find that it may be taking up too much of your staff time, then it makes sense to hire a collection agency. Also, determine just how long you feel you can work late accounts internally before it gets too time-consuming. You may decide that after 60 days, it makes sense to hand these accounts off to an agency for further activity.

Have a process to manage your receivables internally

We understand that many small businesses get to certain things when they can find the time. That’s just part of running a small business. But it doesn’t have to be that way if you take a step back and implement certain systems. One of the most important systems you can put in place is your accounting and collection procedures. When it comes to accounts receivables management, how you handle this internally can only improve what happens when a third party takes over the account. We’ve said it before but invoicing on time, conducting regular follow-ups both written and by phone, and sticking to a schedule is critical to maintaining your cash flow.

Be professional at all times

Our ultimate goal here at American Profit Recovery is to collect money for our clients. But something we strive for in every communication with the consumer is to achieve a compliment for how we handled the situation. That may seem odd to many, but the more trust we can gain from a consumer and the more honest the conversation is, the more results we will achieve in collecting that debt. So what’s our point?

Your internal staff should be setting the same goals when it comes to the tone and manner in which you follow up with customers that have not paid. In short, you just have to be nice. You may not know the situation somebody is in, or they may have a dispute with your services.

You’ll never know if you just demand the money. Be as tactful and respectful as you can with your customers and seek to understand their situation.

You will get paid quicker and you will increase your chances of keeping that customer for the future.

Need some extra help in managing your accounts receivables? Contact our team today and set up a free consultation!