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Collection Agency Secrets for Collecting on Bad Debt
Getting worried that one of your clients, customers or patients will never pay? Have you given up on a customer who's essentially said he won't pay? Congratulations--being stiffed by a customer or patient is a milestone in the growth of a business or medical practice. But even the most hopeless of bad debts can sometimes be collected-collection agencies have been doing it for years. Here are six of their secrets. 1) Don't just call, write. 2) Don't ask if, ask when. 3) Be nice. 4) Be cooperative 5) Know the value of your time But don't just let this fear linger in the back of your mind, fighting with the little voice that says you want your money. To get a rough idea of how much time you can afford to spend collecting the debt, and whether you have the time to do it at all, sit down and write out a rough estimate of the value of your time, the likelihood of collecting, and the amount you are owed. For instance, let's say you are going to assign this task to an administrative assistant whose time is worth $15/hour. The debt is $1000. It is owed you by an old customer who is three months behind but has never been seriously delinquent before, so you say you have a 50% chance of getting the money, making the value of the collection about $500. You divide $500 by $15 and find that your assistant could spend 33 hours collecting the debt before it lost your company money. However, you'd probably still feel a little unsure about whether it was all worth it. Your feelings would be correct: there's still the opportunity cost of all the work your assistant won't be doing to keep your business moving. To be safe, you can also estimate the opportunity cost at another $15/hour, which means you can only really afford to have your assistant spend half as much time, or 16 and a half hours. If you've already spent that much time already, it's time either to call it quits or call in the professionals. 6) Get a collection agency Steve Austin is a regular contributor to Let No Debt Remain Outstanding (http://www.let-no-debt-remain-outstanding.com/), a website with articles on choosing a collection agency, along with recommended the best collection agencies.
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