We are a commercial collections agency and are constantly in contact with small companies and business owners that are curious as to what is the best way to handle debt collection from past due accounts. With years of experience we have collected a list of items that ought to be included into any size company’s collection efforts.
Where you should start in regards to commercial collections is to establish policies and guidelines that will be referred to as your collection policy. This is a very specific set of instructions and details that cover everything that will take place in the process
Below are examples of some of the most popular lines that we recommend including in your collections policy.
- The amount of time in which invoices must be paid and the steps which will be taken when they are exceeded.
- Who will be responsible for collecting the payments which are past due as specified in the previous bullet
- The system that will be set in place to flag accounts that have been past due and who is responsible for contacting them and following up. Communication is key here and policies in place are easy to follow for whoever is responsible for this.
- Determine the proper procedures for how to follow-up with those accounts that have been indicated by the flags. This will need to include specific instructions on when, how and how often the company that is past due will be contacted. All contact should be recorded and documented just in case the case has to be taken to the next phase. Good documentation is very important if the account decides to not pay.
- Set a date in which communications will cease and you will contact a third party commercial collections agency like tclging.com to resolve the issue.
- When efforts have ceased the third party will take over the account. Make sure that you have a point of contact for the third party to interact with to obtain all of the necessary documentation. As mentioned previously all correspondence should be documented already and easy to find by this individual.
- If the company that is trying to be collected from has already closed down there is no point in pursuing them as they are no longer collectible and the receivable should simply be written off.
- Third party agencies will generally not be lawyers which will file a lawsuit for you. If the agency has issues and can not settle the account in an acceptable amount of time you should have a lawyer standing by to take over the work in their own fashion. This will generally result in litigation.
In today’s economic landscape this happens too often and severely cripples small businesses that need the cash flow to continue doing business. By utilizing a professional agency and these tactics you can help to keep your small business running smooth. Having a good collection policy in place and experienced lawyers at your back is monumentally helpful in ensuring this.