Sample Debt Collection Letter: Increasing The Urgency

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Businessman-Balance-C2C-ResourcesAt C2C Resources, we understand that for our clients, the process of collecting a debt can feel like a balancing act.

Communication with a delinquent customer can be like delicate balancing act. You need just the right amount of friendly and the right amount of squeeze. And somewhere in the middle, there may be a need for the right amount of compromise.

At C2C Resources, we advise that the best place to start to collect a debt is by making an assumption.

Yes. You read that right. Make the assumption that a past due invoice is a simple oversight. Start with a quick and friendly reminder phone call or send a friendly reminder letter and move on to your next task.

But if you’ve sent a nice reminder (or two), made a friendly call (or two) that got you nowhere, then it’s time to fire up the heat by adding a significant consequence.

The following sample debt collection letter does just that. Here, we’ve stripped out the ‘friendly’ and added a credit hold, which for most customers, is just the right amount of heat to put that invoice at the top of the heap.

Dear _____________,

We value your business.

Because we value your business, we are concerned that your past due balance of [$$] has not been paid.

Regretfully, we must place your credit privileges with us on hold until payment is received on the outstanding balance.

We do not make these decisions lightly, however, it is important that we are fair to our business and that we require our customers honor their commitment to our credit terms.

Please give me a call if there is a problem in sending your check for the past due balance today.

Thank you for your attention to this matter.

Sincerely,

[Your name]

At C2C Resources, we’re intentional about advising our clients to begin the quest for payment by assuming the best, and increasing the heat with each communication until payment is received.

The Effects of the 2014 Winter Weather

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Everyone is feeling the effects of this harsh winter weather

Snow plow, Commercial Debt Collection Agency.comMany small businesses are feeling a little beat up by this winter’s harsh weather. Even those not in the direct path of the storms will feel the trickle down … regardless of where they’re located.

In areas like the Atlanta where the proper snow equipment isn’t available, businesses shut their doors resulting in big losses in the most recent bout.

Atlanta’s not the only one. Across the nation, snow and ice has wreaked havoc over and over keeping people at home instead of working or spending money. And the North East just got smacked again!

What is the toll? The New York Times reports that this winter’s snow-packed punch is an expensive one for most of us saying,

Economists have placed much of the blame for a recent spate of weak economic data on the effects of the unseasonable cold in the Northeast, Midwest and South, which they project will shave a few tenths of a percent off the growth of gross domestic product in the first quarter.

How have you managed the 2014 winter weather? Are you feeling Mother Nature’s wrath?

Easy In-House Debt Collection

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Are your in-house debt collection procedures streamlined?

Do you have a process to follow that helps keep your past due accounts to a minimum? If your in-house debt collection policies could you some fine-tuning, C2C Resources can help.

It’s not uncommon for the task of debt collections to be neglected in a business. For one thing, it’s not pleasant to make a collection call so calls often get put on the back burner. However, if you have the right tools at your disposal for making calls and sending notices, the task of managing your Accounts Receivables can be less painful and considerably more effective.

Debt Collection, C2C ResourcesC2C Resources can help you manage collections in-house with its powerful Accounts Receivables management software system. Profit Maximizer is designed to help businesses keep track of the details throughout the debt collection process. It provides Contact Management, a detailed Reporting System, call scripts and collection notices that you can easily adapt for your needs. Simply fill in the blanks on the template and hit ‘send’.

You can also sync with Quickbooks and input Excel spreadsheets with the click of a button.

As a partner, we provide our clients with everything they will need to manage accounts receivables in-house through our Profit Maximizer program. And there’s no extra cost to use this web-based program! When you partner with us, Profit Maximizer is yours and we offer support as you learn the system.

Experience the difference with Profit Maximizer! Check it out at C2C Resources.

 

Why Do Some Collection Agencies Charge More?

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Dollar sign, Collection Agencies, C2C ResourcesCollection Agencies do not all operate in the same way

We all like a good deal. We love to save money. So, while it’s tempting to choose a Collection Agency charges you less, it’s the net recovery rate that really matters.

Licensing
There are some key factors that drive the rates a collection agency charges. For instance, it costs time and money for an agency to obtain the proper licensing. Since licensing protects you and your business, it’s worth it to pay more.

Collectors and caseload
You’ll also pay more to partner with an agency that uses only experienced collectors. High caliber collectors will cost a little more but you’ll enjoy the benefits of a higher rate of collection. Savvy collection agencies will carefully restrict a collector’s caseload, too. By doing so, all cases, large or small, received the attention they deserve. This strategy requires that an agency hire more collectors and possibly charge a higher rate, but fewer accounts are turned over to legal.

Remittance
Some collection agencies that charge less do so because they only remit monthly. They hold onto your money and collect interest on it while saving themselves the expense of weekly remittance. Agencies that remit weekly may cost more but you get your money much more quickly.

Information
Collection agencies that invest in the personnel and technology needed to keep you in the loop on your account will also cost more to partner with. The type of software required to make your information available to you has a price tag.

When looking for the right agency, ask the right questions so you understand their rates. Are they licensed? Are their collectors experienced? How do they manage small balance accounts verses large ones? Do they remit monthly? Weekly? How many collectors touch each account? What are their communication policies? Do you have access to your information when you want it and need it?

You’ll pay more for the qualities that put an agency a cut above.

 

Is Your Commercial Collection Agency Licensed?

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How can you know for sure that you collection agency is a quality company? Ask if they are licensed!

Not all Collection Agencies are created equal. There are many top-notch agencies all over the country and a whole bunch of sub-standard ones. A quality collection agency will obtain a license to do business if their state requires it.

US Map, C2C Resources Debt Collection AgencyOver 20 states do require commercial collection agencies to be licensed. Oddly enough, many agencies ignore the law!

The issue of licensing should be top of mind when choosing a commercial collection agency. The reasons are simple:

1. It’s the law.
The laws vary from state to state but some requirements may include: registration and testing of agency personnel, audit of collection procedures and letters, agency bonds, and most importantly trust procedures and audits to make sure that your money is safe.

2. Your reputation can be affected.
In your customer’s eyes, your collection agency becomes an extension of you. You want collectors to represent you in the most professional, ethical way possible. A licensed collection agency is held to a high standard and will take pride in how they do business.

3. You may be liable.
A Collection Agency that does not adhere to the laws can be a liability. Your debtor could sue you both based on the actions of your Collection Agency. A licensed agency will operate within the laws in the effort to collect on your behalf.

A Collection Agency that is licensed can provide a copy of their state issued certificate easily and what’s more, they’ll be proud to do so! If they can’t, ask them what the requirements are for the state in which you are doing business. Any collection agency that cannot answer that question isn’t the one for you. Keep shopping!

Protect yourself and your business by choosing a collection agency that is licensed.

 

Be the Creditor that Stands Out So You Can Get Paid

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As a creditor, you must stand out from all the other ones in order to be the one who gets paid!

Businessman, Creditor, C2C ResourcesWhen you call your past due customer, it’s quite likely that yours is not the only collection call he’s taken that day. In fact, he may be staring at a stack of bills an inch thick while on the phone with another creditor right now!

Why should he choose to pay YOU over all the other creditors he’s dealing with?

Because you have an edge! You know how to keep your cool as you dig beyond your customer’s claim of a cash flow problem. You’re a creditor, so you know the importance of listening to your customer’s story and the importance of verifying his claims. AND you know how helpful his Merchant Statements can be in spotting downward trends in sales.

Fact is, most of his other creditors aren’t listening patiently or validating any claims. And they certainly aren’t offering truly helpful suggestions for solving the debt. They’re loosing their cool instead. And every creditor that looses it get’s his invoice shoved to the bottom of the pile.

You have a greater chance of being the one creditor who gets paid by remaining professional in every engagement with your customer. He’ll take you more seriously when he sees you’ve done your homework. And when he realizes that you know he can pay his debt to you, he’s more likely to do so, especially when you’re flexible about how and when the bill will be paid.

The bottom line is, your customer can’t pay every past due invoice he owes to every single creditor, but he probably can pay yours. Make him pick you over the all those other creditors by patiently listening to his story, validating his claims and returning to him armed with information. You may be the one creditor who is willing to work out a plan without yelling and screaming. If so, he’s likely to pay you first.

 

In Commercial Debt Collection, Should You Take a Settlement?

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When collecting a commercial debt, the decision whether or not to take a settlement comes down to one thing …

Hand shake, Commercial Debt, C2C Resources

In Commercial Debt Collection, sometimes a settlement is the right choice.

If it’s likely that your customer will be unable to honor an extended payment plan. To know for sure, you must find out the facts of your customer’s financial situation.

Start with a lengthy and detailed conversation with your customer. Listen intently to his explanation and take detailed notes.

While you’re on the phone, request that he send you his last 6 months worth of Merchant Statements. Once you have all the information you can get from him, take the following steps:

• Review his Merchant Statements to spot downward trends in credit card sales. Are they up or down?
• Verify the claims he’s made by contacting his other creditors. Did he tell them what he told you?
• Talk to your customer’s bank. Would a check clear if he were to issue one?

The information you gather may lead you to conclude that your customer really has no money (or too limited an amount) to pay you. If it looks to you like things are likely to continue to deteriorate, then taking a lesser amount now is better than being paid nothing later. It’s but one of the challenges of commercial debt collection.

It takes patience to do the investigative work to make the settlement decision in the process of commercial debt collection. But it’s the only way to make an informed choice.

The Beauty of a Merchant Statement

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Merchant Statements can help you in your business

Does your new customer do a meaningful amount of credit cards sales through her business? If so, you need her Merchant Statements in your client file right from the start. Here’s why:

Business people, C2C Resources, Merchant StatementsTaking on a new customer is a new credit risk you’ve chosen to take. From the first day you meet her, you discuss your credit policies, make your terms clear, put agreements in writing, shake hands and hope it will be a profitable, long-term business relationship with nothing but smooth sailing ahead. Then one day down the road, she requests an increase in credit.

Such a request could be a good thing or it could be a bad thing. Maybe their sales for your product increased. That’d be great! It could be that they’re shifting their business away from a competitor. That’s a perfectly valid reason to request an increase. However, it could be that sales are way down or that a competitor has terminated her credit privileges. Not so good. But how would you know unless she volunteers the information?

This is where the Merchant Statements come in. If you request 2-3 months worth of merchant statements right at the start of your business relationship (when your customer is most open to providing them), you’ll have a powerful benchmark sitting right there in your customer file ready for just such an occasion. When she requests an increase in credit, you request another set of Merchant Statements to compare to your first set. Are credit card sales up or down? If sales have declined, is it minimal or significant? What?

Request Merchant Statements right from the start of your relationship. Keep them in the file for future reference and use them to make informed decisions.

 

Is it Time To Accept A Payment Plan?

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Dollar sign, Collection Agencies, C2C ResourcesA cash flow problem is almost always the reason a customer requests a payment plan. The big question is; how do you determine if that’s the best course of action for you and your business?

Before you can make that determination, you need to understand your customer’s need for the request. Find out the backstory. What are the circumstances surrounding the request? Write down as many details as your customer is willing to offer.

The next step is to validate the claims. Is your customer telling you the truth?

Talk to other creditors to see if they are hearing the same things you are. Try looking at your customer’s last 6 months worth of Merchant Statements to see if there’s been a decline in credit card traffic. You might even try talking to their bank to see if a check would clear if they were to issue you one.

A payment plan isn’t the best solution to account that is past due, but it’s certainly better than not being paid anything at all. If your customer’s story checks out, working with him in any way you can (within reason) may help you keep a good customer who is simply going through a tough time and in the long run, may be the most profitable option.

Payment plans are one options that may serve you well.