Collecting Past Due Accounts: When To Quit

A question often arises in our offices, “When should I stop my efforts collecting past due accounts?”
Unlike fine wines or select cheeses, past due accounts do not get better with age. Most businesses make the mistake of waiting twice as long as they should before handing over their accounts receivables to a commercial collections agency…

A question often arises in our offices,”When should I stop my efforts collecting past due accounts?”

Unlike fine wines or select cheeses, past due accounts do not get better with age. Most businesses make the mistake of waiting twice as long as they should before handing over their accounts receivables to a commercial collections agency. For instance, did you know your chances of collecting past due accounts in-house drop 12% every 30 days

When it comes to collecting past due accounts, it͛s important for business owners to remember, collecting on outstanding receivables is a financial process. Because we have an invested interest in our companies, we tend to treat collection as an ͞emotional͟ process instead of a financial one. Whether or not we make or lose money needs to be the determining factor when pursuing collecting past due accounts.

For example, Collecting on an invoice that is less than 120 days old holds an 80% success rate while dropping to 40% collectible after that time frame. Because we still see the debt as outstanding, we mistakingly apply the same amount of time and effort trying to collect those older accounts as we do the new ones. Our motto: Don͛t spend a dollar chasing after a dime.

Early warning signs it may be time to stop your collecting past due accounts efforts
Customer avoids contact attempts
Refuses to sign personal guarantee
Customer breaks terms of original agreement
Customer breaks their first promise
Customer only makes partial payments to buy more time.
Customer ignores demand letters

You have business to run. You have better things to do than spending your valuable time Collecting past due accounts. Handing your outstanding debts and accounts receivables over to a commercial collection agency is often your best course of action.

Debt Collection Laws – What You Should Know

With millions of Americans in debt, debt collection has become a booming industry. In 2004 alone, the debt collection industry made over $16.5 billion in profit. With so much money on the line, debt collection agencies are under a lot of pressure…

With millions of Americans in debt, debt collection has become a booming industry. In 2004 alone, the debt collection industry made over $16.5 billion in profit. With so much money on the line, debt collection agencies are under a lot of pressure. In some cases, this pressure has resulted in abusive and often aggressive behavior leaving many debtors feeling intimidated

In order to protect debtors from this type of aggressive behavior, the United States Congress passed several debt collection laws to help keep debt collectors and debt collection agencies in check. The debt collection laws make sure that the growth of the debt collection agency is coupled with the values of good service and integrity.

The primary debt collection law is the Fair Debt Collection Practices Act (FDCPA) of 1977. FDCPA specifies the best practices in which debt collectors must conduct themselves, placing measures prohibiting debt collectors from engaging in certain activities. Some of these measures include the following:

  • Violations of your privacy – Debt collectors can only talk to other people for the purpose of finding your current location. They are not allowed to disclose any information regarding an outstanding or the terms of the debt collection process.
  • Unfair calls or visits – According to debt collection laws, especially the FDCPA, debt collectors are not allowed to appear at your doorstep whenever they want to. They are only allowed to call or visit between the hours of 8:00 am and 9:00 pm. Debt collectors are also prohibited from appearing at your workplace, especially if you have previously informed them that you are against such visits.
  • False Representation – The debt collector cannot intimidate you with false authority; they cannot say that they are a lawyer or lawfirm if they are not. The debt collector cannot inform you that they have the power to personally repossess your things. They also cannot present documents that give the appearance their actions are directed by the US or State Governments.

However, the FDCPA is not the only law that is related to debt collection. Individual states usually have their own debt collection laws that are imposed to provide protection for their residents. For example: in California, debt collection laws require the debtor to keep written records of communications and transactions with the debt collector.

On the other hand, in Pennsylvania the Fair Credit Extension Uniformity Act was passed helping protect debtors from the deceptive behaviors of debt collectors. This act supports the FDCPA and it states that debt collectors CANNOT falsely imply that your inability to pay your debt is a crime. The debt collection laws of Pennsylvania also detail that debt collectors are not allowed to issue false threats of legal action.

All of these debt collection laws at both the Federal and State levels, have one thing in common: they help protect debtors from being abused by eager debt collectors.

Do you have a question about the Fair Debt Collection Practices Act or debt collection laws in your state? Feel free to contact the Stevens-Lloyd Group, Inc today.

Understanding Fair Debt Collection

The words debt collection bring a lot of panic and anxiety to individuals who are in debt. It may be your student loans, your mortgage on your house or your car payments. No matter what the debt may be, debt collection is something…

The words debt collection bring a lot of panic and anxiety to individuals who are in debt. It may be your student loans, your mortgage on your house or your car payments. No matter what the debt may be, debt collection is something that every debtor has to face. After all, your creditors and lenders need to get their money back.

So when you answer your phone and you encounter the representative of a debt collection agency, don’t panic. Remember that debt collection is an activity that is regulated by the law. The law ensures that debt collection is just an act to pursue you to make payments; it will not impede on your rights. The Fair Debt Collection Practices Act of 1977 details the rights that you have when it comes to debt collection.

Understanding Debt Collection

If you owe a certain amount of debt to a company, you usually pay the debt according to the contract that you signed. However, if you miss payments or you refuse to stick to the payment plan, the company may turn the debt over to a collection agency– this can also happen if you continually ignore notices from your lender. Simply put, debt collection happens when your creditor or lender feels that pursuing you for payments is already taking up too much of their resources.

Of course, the debt collector cannot simply pop up on your doorstep, demanding that you pay your debt. Typically, debt collection starts when a collector contacts you and notifies you of the status of your debt. The initial contact can happen through a lot of ways. It can be done through a letter, a fax, an email, or a typical phone call. In some cases, the debt collection process can start with a home visit from the collector. However, do not panic. The first visit is usually for the purpose of gathering information only. The debt collector simply wants you to know that he will be handling your payments.

Debt collection is a very transparent process. You will be given all the information you need. For instance, within five days of initial contact, the collector will send you a written document that will provide the necessary details regarding your debt. It will include the name of the creditor or the business from which you borrowed the money. Also included is the specific amount that you have yet to pay.

However, it is important to note that debt collection activities are not always 100% accurate. Sometimes, businesses may fail to update their records assuming that you have missed some payments. If you believe that you have sufficiently settled your debt, you can just write a letter to the collector to explain yourself. You must show proof that you have settled the account, and until the collector can dispute your claim, all debt collection activities will stop.

Do you have questions regarding debt collection?

Call the Stevens-Lloyd Group today.

The Importance of Understanding the Debt Collection Statute of Limitations

Debt collection is covered by the statute of limitations. The statute of limitations refers to the law that sets a deadline for law suits. For every type of case, the law sets the timeframe in which debt collection agencies can legally attempt to collect…

Debt collection is covered by the statute of limitations. The statute of limitations refers to the law that sets a deadline for law suits. For every type of case, the law sets the timeframe in which debt collection agencies can legally attempt to collect on that debt , including filing lawsuits against the debtor.

Normally, the debt collection statute of limitations begins to run the date the contract is “breached” “or broken.” In reference to debt collection, after the designated statute of limitation expires, a debt collector can no longer collect on the debt. So it is imperative you hand the debt over to a collection agency to begin the process before the debt collection statute of limitations expires.

The debt collection statute of limitations is computed according to the last time your client made a payment to the outstanding debt. In most states, 180 days(Six months) will be added to the date the last payment was received. From that point, the debt collector will then add the number of years of the statute of limitations according two things: the state where the debt was incurred and the type of agreement that was entered into for said debt

For example: let’s assume the debt was an open-ended account in Tucson, AZ. The last payment received was May 15, 2016. 180 days is added to the date bring the date to November 11, 2016. From that point, six years will be added to the November 11, 2016 date. Making the date that the debt collection statute of limitations expires November 11, 2022. All debt collection activities must cease upon that date since the debt collector can no longer use legal action to force the debtor to pay.

This is why Knowing the debt collection statute of limitations in your area is so very important. With this information, you can know the situation of your account and how it affects the chances of you being able to recover your outstanding receivables and/or debts

To determine the statute of limitations on your debt, it is important to know what kind of debt you have.

Open-Ended Accounts – According to the Truth in Lending Act, an open ended account is a type of credit plan that has repeated transactions and interests and balances that vary from time to time. Credit cards belong to this classification.

Oral Contract – This is a contract where you verbally guarantee someone that you will pay the debt you owe him

Written Contract – A debt where the creditor and debtor sign an agreement that details the terms of payment as well as fines and penalties

Promissory Note – This involves a written document where the debtor agrees to pay the debt according to a specific schedule of payments. The debtor also agrees on the applicable interest rates.

Remember, even if the account is only a month (or a even day) away from the expiration of the statute of limitations, you can reset the the six months and six years statute timeframe expiration date if your client/customer pays just a single dollar towards the outstanding debt resetting the six months and six years statute timeframe for any possible law suits.

Remember, even if the account is only a month (or a even day) away from the expiration of the statute of limitations, you can reset the the six months and six years statute timeframe expiration date if your client/customer pays just a single dollar towards the outstanding debt resetting the six months and six years statute timeframe for any possible law suits.

For a complete lis of the Debt Collection Statute of Limitations by state visit:
https://www.bankrate.com/finance/credit-cards/state-statutes-of-limitations-for-old-debts-1.aspx

Commercial Collection Agency – 5 Things to Consider when hiring one

While there definitely are ways to avoid using a commercial collection agency, sometimes you have no choice. Running your business is what you excel at, after all, and dealing with recovering outstanding debts and delinquent accounts can consume your patience, time and resources. Calling in the professionals…

While there definitely are ways to avoid using a commercial collection agency, sometimes you have no choice. Running your business is what you excel at, after all, and dealing with recovering outstanding debts and delinquent accounts can consume your patience, time and resources. Calling in the professionals is often the best choice.

When looking for a commercial collection agency, it͛s important to remember that not all agencies are created equal, nor are they the right choice for your particular business. Here are 5 things to consider when choosing a commercial collection agency to partner with.

Commercial Collection Agency – 5 Things to Consider

Research. Commercial Collection Agencies will often specialize in particular fields. For example, one commercial collection agency might specialize in working with small and home-based businesses, while another made specialize in securing funds for large corporations. When possible, be sure to determine what size businesses the agency works with and what type of debtors they will go after

Insurance. No matter the level of research you do, you always run the risk of working with a commercial collections agency that uses ͞aggressive͟ debt collection tactics or leaves the debtor with the impressionthat the agency has acted in bad faith, leaving the debtor with the option to sue. No matter the outcome of the suit, whether you win or lose, you want to ensure that you will not be held liable for the actions of the agency. Always retain proof of insurance, otherwise know as ͞Error and Omission͟ ( or E and O͛s), from commercial collections agony you choose in the unlikely event both of you are taken to court by the debtor. Any good and reputable Commercial Collection Agency will be able to provide it for you.

Validity. Different rules apply for different commercial collection agencies in every state and locale. It is imperative that you verify that the agency you want to work with is licensed, bonded and adheres to the rules laid down in the Fair Debt Collections Act

Click Here to see our previous article entitled Understanding the Fair Debt Collections Act.

Debtor Recovery. Good commercial collections agencies will have at their disposal the ability to perform ͞Skip Tracing.͟ Otherwise known as debtor and fugitive recovery, Skip Tracing allows a commercialcollection agency to access several databases that provide them the ability to late a debtor who has ͞skipped town͟ and left no forwarding address; an important tactic to deploy should you find yourself unable to contact a debtor or have been repeatedly ignored.

Fees and Costs. Once you͛ve done your research and found a commercial collection agency that you would like to work with, you need to consider the costs associated with their services. Collection agencies can vary when it comes to charging for their services and it is important for you to choose the one that is right for you and your business. Two common payment structures are contingency and flat fee.

  • Contingency: This payment arrangement type os typically what you will find. Most commercial collection agencies use a no collection no fee model and charge anywhere from 25-45% of the total amount of the debt. This amount is usually determined by the age of the debt and the amount of attempted contacts with the debtor that have been made.
  • Flat Fee: A fairly small flat cost associated with a type of ͞Pre-collection͟ fees. This type of fee is usually offered early on in the debt collecting process.

It is important to keep in mind that once you hire a commercial collection agency, you won;t be receiving the full amount of the total outstanding debt. Consider exhausting all your options before hiring a debt collection agency.

Check out our previous article How to Avoid Using a Collection Agency for more information.

With that being said, as we mentioned at the start of this article, dealing with recovering outstanding debts and delinquent accounts can and will consume your patience, time and resources. Instead of allowing those accounts get away with not paying, calling in a professional commercial collection agency is often the best choice.

How to Avoid Using a Commercial Collection Agency

5 things that you can do to encourage customers to pay on time.
It doesn͛t matter what type of business you own, odds are you will one day face the problems associated with delinquent payers and debt collection. Sometimes it will be a case of oversight on the customer͛s part, other times it will…

5 things that you can do to encourage customers to pay on time.

It doesn’t matter what type of business you own, odds are you will one day face the problems associated with delinquent payers and debt collection. Sometimes it will be a case of oversight on the customer’s part, other times it will be due to willfully and actively avoiding their payment.

Although there are plenty of tips and strategies for proceeding with debt collection, below are five steps you can take to encourage your clients or customers to pay on time and avoid using a commercial Collection Agency

How to Avoid Using a Commercial Collection Agency

1. Credit Check – Although credit checks can be expensive and sometimes time-consuming, nothing could be more important when it comes to avoiding the hassle of a delinquent customer or client–especially in the case of a significant debt. Small transactions are rather pointless for you to run a credit check, they simply aren’t worth the expense or the time invested. However, if the agreement you are entering into is creating a long-term relationship and/or is a considerable amount of revenue that could impact your bottom line, run a credit check. Although not a guarantee of payment, running a credit check can help you avoid using a commercial collection agency to track down those problem clients and delinquent accounts in the future.

2. Checking References. Although readily asked for when applying for a job or renting an apartment, reference checks are often overlooked as a reliable means of determining the risk of a customer or client. Contact their past business partners/relationships to see whether or not their experiences with the risk were positive and whether or not they paid on time. Although it may seem counter-intuitive, invite them to do the same with you.

3. Put it in writing. Putting the terms of your payment arrangement in wiring, including due dates and the amounts owed, is a must. By clearly communicating your terms in writing and having your clients/customers agree to those terms, you ensure your risk against delinquent accounts and help avoid using a commercial collection agency.

4. Accept credit cards. Though not a perfect fit for every business type or transaction, they can be very helpful when a customer/client owes you a large sum of money. By accepting payment via credit card, you shift the burden of debt collection onto a third party, namely the credit card company. The small fee you will pay per transaction is a small price to pay compared to hiring an attorney or commercial collection agency. By accepting credit cards, you can focus on what you’re good at, running your business, and let MasterCard and Visa deal with the collections.

5. Make contact. One of the easiest ways to avoid using a commercial collection agency is to simply make polite and cordial contact with the debtor. It’s entirely possible the customer/client simply overlooked their payment. In this case, a friendly reminder phone call will often do the trick.

A simple phone call, email, or letter on your company’s letterhead notifying them of their late payment simply stating something along the lines of ͞Have you overlooked this?͟ is often times the very best way to begin the collection process.

The fact remains, no matter the steps you take, no matter how diligent you are or the care you take in assessing the risk, you will end up with a delinquent account. However, by following the items outlined above you can reduce your future problems dealing with debt collection and avoid using a commercial collection agency.

The above article contains general legal information and does not offer any legal advice. The law is complex, varies from state to state, and changes often. When it comes to legal advice always contact a licensed lawyer.

Credit Management Services: 5 more Tips for Successful Receivables Recovery

In out first installment of our Credit Management Services series and successful recovery of outstanding receivables, we covered tips from documenting everything to payment plans and finance charges. In our second article, we discussed the importance of making …

In out first installment of our Credit Management Services series and successful recovery of outstanding receivables, we covered tips from documenting everything to payment plans and finance charges. In our second article, we discussed the importance of making copies, providing demand letters and personal guarantees when attempting to recover your delinquent accounts receivables.

In part three of our Credit Management Services series, we continue with Collection Manger Joy Paul͛s tips for successful recovery of outstanding receivables.

Credit Management Services

Tip #13 – Timing Is Everything

Credit Management Services | International Debt collector

Debts are not like fine wine, they don͛t get better with age! Remember that timing is everything. Debts become less collectible the older they get. The more time elapses, the more opportunity there is for the debtor to file bankruptcy or liquidate their assets and get out from paying their bills entirely

Businesses tend to hold on to their delinquents an average of nine to ten months, six months longer than they should. There is a systematic approach to recovery of outstanding receivables. This requires resolution of these accounts within 90 days and subsequent follow up if the debt is still not paid

After an account is ninety days past due, send a 10-Day Demand Letter. It is imperative to place a call to the debtor on the tenth day. Inquire if they received the 10-Day Demand Letter. State that if they don͛t pay, they will be sent to collections.

If the account is over 120 days and there is little to no movement towards money, it is time to deploy a collection agency or initiate legal action. The last statement or demand letter made to the debtor has to specify exactly what you will do and when you will do it. Holding on to accounts too long causes added internal costs. Time spent working on fresher account is far more productive than hacking away on older ones!

Tip #14 – Hiring Collection Agencies – Don͛t Spend A Dollar Chasing A Nickel

Most businesses wait twice as long as they should before turning accounts over for outside collections. For every 30 days, your chances of collecting in-house drop another 12%

Collecting debt is basically a financial process. We treat it as an ͞emotional͟ process because we͛re human. But it͛s the financial process that determines whether we make or lose money for our company.

Accounts up to four months old are 80% collectible. Files 4-12 months old are about 20% collectible. Because the older accounts are obviously less collectible than the new ones, and because you don’t have enough time to work on them all with equal effort, you have to focus on the most recent ones and give up on some of the older accounts

When the debtor is communicating with you, do not place an account with a collection agency. Only assign accounts to a collection agency when the debtors completely ignore demands for payment and do not return calls, refuse to pay, when they lie, or when there are numerous broken promises or an NSF check. Another reason to retain a collection agency is if there is an irreconcilable dispute.

According to Joy, collections agencies can also offer suggestions and act as sounding boards. For instance, The Stevens-Lloyd Group suggested on one problem account to hire an private investigator to locate assets. This advice actually paid off and Joy was able to recover the money through legal means

A collection agency can offer advice and encouragement. After all of the steps required to file a small claims case have been implemented, a collection agency can take over once a judgment is procured. This is advantageous because attorneys can be expensive and collection agencies work on a strictly contingency basis.

If a case is large enough to render an attorney cost-effective, a good collection agency, such as The Stevens-Lloyd Group, knows who the good attorneys are. They have the knowledge and experience to cull out expensive and mediocre attorneys.

There is definitely something to be said about getting a problem account off of your shoulders!

Tip #15 – Be Proactive With Legal

In some situations, legal action is necessary. In her business, Joy has come across debtors who received the insurance check but deny receiving it, therefore not paying TM Building Damage Restoration for the work they performed. Other situations may be debtors refusing to pay, never returning phone calls or responding to emails, or sending a check with a partial payment and marking it, “paid in full.”

In handling unpaid accounts, Joy realized that there comes a time when you have to quit working on an account and proceed with legal action. One option is a Small-Claims Court. Anyone can file suit in a Small-Claims Court, without representation by an attorney.

The chief advantage of filing in small claims is the low cost. In some cases, less than $200 covers the entire cost of filing a claim and having papers served on the defendant.

You can also hire an attorney to file suit on an account in civil court. But a far less expensive use of an attorney is to hire one to send dunning letters to your debtors on the attorney͛s stationery. The advantage of the letter is that it͛s not only relatively inexpensive, but, more importantly, a letter from an attorney, unlike regular bills from you, tends to get opened. Debtors realize that to ignore a legal-looking notice could result in a fine, repossession of physical assets, or worse.

Tip #16 – Going To Court

In a class she attended entitled ͞Collection Law 2013͟, Joy studied the key aspects of collection law. Attending this class plus going through the actual process and applying what she learned has helped Joy to be the success she is. This, combined with the expertise of The Stevens-Lloyd Group, Inc. have proved invaluable in Joy͛s pursuit of excellence

Joy won 5 out 6 small claims and one civil case. She handled 6 small claims cases, won them all and recovered them all. Get all of the court forms in triplicate. Joy reminds us that you must notify the debtor when taking them to small claims court. Joy recommends small claims court for cases $1,000 and over. The small claims office in Tucson, like many small claims courts throughout the country, is very helpful and costs can run $200 – $500.

Accounts owed for over $2,500 is considered a civil court case. However it must to be under $10,000. Be mindful of statute of limitations, 290 days in civil court to get it in the court. Joy learned that she can file $10,000 civil cases without having to hire an attorney

Through her experience filing small claims and justice claim lawsuits, Joy discovered the value of deploying Constables. They may cost a little more money, but Constables are much more effective than regular process servers in serving documents to debtors. Costs are $78 to file and $78-$140 to hire a constable. A constable is a sheriff and is highly recommended and critical. He or she wears a badge, which proves to be very intimidating plus effective when it comes to serving debtors. He or she will attempt service three times. The more information you can give the constable the better. The constable can also help you locate the debtor

You must notify a debtor if you win the case. You can collect all of the fees and court costs incurred from the debtor, but judges can be temperamental regarding the collection interest.

And lastly, keep in mind that the legal process is very intensive, all paperwork has to be properly filed and on time!.

Tip #17 – Locating Assets Once Judgement Is Rendered

Private Investigators can be hired for $75. For instance, a PI will check the debtor͛s utility bill to locate where they live. They will also conduct a comprehensive asset and liability investigation on the debtor, as well as extensive skip tracing. For large amount owed, this is the recommended step in order to locate the debtor and their assets.

Credit Management Services: 7 Tips for Success Guaranteed to Recover 100% of Your Outstanding Receivables

With billions and billions of dollars in debt worldwide, both creditors and collection agencies are feeling the pressure. Debt collectors looking to recover outstanding receivables must employ techniques that will encourage debtors to pay. Successful debt collection…

With billions and billions of dollars in debt worldwide, both creditors and collection agencies are feeling the pressure. Debt collectors looking to recover outstanding receivables must employ techniques that will encourage debtors to pay. Successful debt collection and outstanding receivables collection techniques will help the collector get the account settled immediately, while still being mindful of the laws that protect debtors.

Meet Joy Paul

Joy Paul is the dynamic and energetic Marketing Director, In-House Collections Manager and part-owner of TM Building Damage Restoration, a licensed general contractor. Located in Tucson, Arizona for over 30 years, TM offers complete fire, water, wind, hail, collision, vandalism/burglary, and sewage back-up damage restoration and mold remediation. They’re also a dual licensed roofing contractor, with emergency construction, cleaning, and restoration crews on call 24/7

Issues Faced

As an in-house-collector, Joy encountered many excuses from clients delinquent in paying their invoices. She’d heard everything from, ͞I never received a bill͟ to “my invoice was incorrect”, or ͞TM Building Damage Restoration [allegedly] didn’t do all of the work͟. Another frustration Joy occasionally faced was when doing work for friends. Seems many times that friends just didn’t pay their bills! She reported that one-third of her cases were downright fraudulent.

Then approximately five years ago, TM Building enlisted the assistance of The Stevens-Lloyd Group, Inc. a corporation specializing in domestic and international commercial debt recovery. Joy teamed up with the Stevens-Lloyd Group and instituted a program which proved successful in recovering nearly all of TM Building Damage Restoration’s outstanding receivables!

The Following are Joy’s Tips for

Recovering Outstanding Receivables:

Tip #1 – Document Everything

Joy utilizes an extensive phone log. She keeps detailed call records, conducts research on her customers utilizing TM Building’s database, and even notes the customer͛s last date of payment. Joy reports in clear yet simple terms, and manages her activities to control the territory. Joy notes that verbal skills just aren’t enough. It’s imperative to accurately document each call, thereby being instantly able to retrieve any account. This allows her to whip through skip tracing resources quickly and productively while planning and managing an inventory of many accounts

Tip #2 – Call Weekly On All Accounts Over 30 Days Old

outstanding receivables | debt recovery tactics | commercial debt collection

Joy developed a system which consists of calling weekly on all accounts which show it’s been 30 days since the job was completed. She keys in on accounts which are mainly in the $7,000 to $9,000 range. When recovering debt, Joy notes that the phone is ten times more effective than written communications. It’s imperative to get on the phone early and skillfully resolve unpaid accounts. A reminder that the phone is a cost-effective investment that will retain customers who can be saved.

Tip #3– Demand Payment in Full!

When Joy contacts the debtor, she asks for payment in full. Typical responses may be,”Yes, I’ll pay’, “No, I won’t pay”, a vague reply of neither yes nor no, or silence at the end of the phone line. If the answer is, “No, I won͛t (or can’t) pay”, find out why and resolve the situation. Determine if the problem is slow business or accounts receivable issues. If it’s the latter, ask the debtor when he expects his receivables to come to fruition. The debtor’s priorities may be other suppliers he has to pay, outstanding bank loans, or payroll for instance. Make it to number two or three and push it up his priority list!

Put pressure on the debtor. On large amounts owed, you may want to make a demand for a financial statement. You ask for a financial statement if the debtor needs to buy product from your company or if he is requesting a payment plan. Financial statements consist of an operating statement and a balance sheet. Total of assets column equals total of debt net worth column. You want to know if the debtor͛s current flow of cash is sufficient to pay your debt. Pay particular attention to the bottom of the financial statement. If the assets exceed the liabilities, the debtor is in good shape and can pay his debts!

Put pressure on the debtor. On large amounts owed, you may want to make a demand for a financial statement. You ask for a financial statement if the debtor needs to buy product from your company or if he is requesting a payment plan. Financial statements consist of an operating statement and a balance sheet. Total of assets column equals total of debt net worth column. You want to know if the debtor͛s current flow of cash is sufficient to pay your debt. Pay particular attention to the bottom of the financial statement. If the assets exceed the liabilities, the debtor is in good shape and can pay his debts!

On the other hand, a positive response may be,” ͞Thank you for reminding me, I’ll pay you in full today.”But more often than not, you’ll have to nail down the promise. Experienced collectors can tell you that there are plenty of debtors who’ll promise you anything you ask, just to get you off the phone.

When you get a promise to pay, say something to the effect of, ͞That’s great, Mr. Debtor. Let’s see now, today is the twelfth and mail service takes about 2 to 3 days, so if you send it today, I’ll certainly have your check by the fifteenth. I’ll mark my calendar for the fifteenth so I’m sure not to miss it

Tip # 4 – When to Offer Payment Plans

When debtors balk at payment in full, Joy advises, “We’re not a bank; we have to pay our expenses upfront.”

However, sometimes she has to offer payments.* There are a limited number of payment offers if she can’t secure payment in full. The first is two payments. The next, obviously, is three. When she makes these offers, Joy makes it clear that she͛s “breaking the rules, this is a one-time offer only.”Therefore, no precedent is being set and she may even risk getting into trouble by offering the option.

*Joy offers no settlements or discount programs on delinquent accounts

Tip #5 – How to Handle Slow Payers and Stalls
Debt Collecting Percentages

Collecting is negotiation. The debtor wants to delay. You want it all now. Collecting is selling. Qualify the prospect, decide whether she͛s going to pay, ask probing questions.

Collecting is percentages – the more contacts made, the more money comes in. “Go to bat as often as possible.”

Collecting is a game. The debtor will attempt to manipulate. Confront them and stop the game

oy deadlines the debtor. For instance, Mr. Debtor, pay by October 31st to avoid being charged interest or being turned over for collections

Typical stall tactics Joy comes across are,” ͞The owner is out of the country”, or ͞I never received your bill.”Other “stalls͟ debtor’s use are, ͞I have other bills to pay; I can͛t pay anything now”, or “We can pay you when our customer pays us.”And finally, ͞I need an extension on this.”

Joy learned early on in the process the art of saying, “No”

Tip #6 – Role Playing

The Stevens-Lloyd Group showed Joy Paul and TM Building the value of “role playing”. Role playing stars YOU as the debtor. Only two people get to talk. Each person must stay in the rule. The players don’t have to look at each other. Non-playing members actively listen and the group offers evaluations.

Simply stated, if you want to become a great cook, you won’t achieve your goal just by watching a top chef on TV. You have to parlay your knowledge into a state of confidence and proven results. Role playing is a great technique for achieving a consistent level of success in recovering debt!

Outstanding-recoverables-tm-building-workauthorizationTip #7 – Finance Charges

Philosophically speaking, if you add a finance charge or interest, your bill will be paid faster. Without it, time is on the debtor͛s side since it costs nothing to delay payment. There͛s actually a disincentive to pay because an unpaid bill earns interest for the debtor.

To reduce the negative incentive, Joy makes the debtor pay for sitting on her money. Interest, service charge, etc., must be properly disclosed. TM spells this out on their Work Authorization Form.

See example to the right:
(Click on the image for a larger view)

http://www.www.stevenslloydgroup.com/credit-management-services-7-tips-success-guaranteed-recover-100-outstanding-receivables/