As a business owner, there are few things that are more frustrating than a customer not paying their bills on time. With all of your other responsibilities, making time for the debt collection process can be stressful. This is one of the many reasons why so many small businesses turn to collections agencies to help them collect on past due accounts.
When it comes to debt collection, both business owners and customers often have many questions and concerns. A common concern among business owners is that their customers will be harassed during the debt collection process or that using a debt collector will ruin a relationship between you and your customers. The debt collection industry is largely misunderstood, and chances are, there are many things you may not know about debt collection and how it affects your customers. Here are four things you probably didn’t know about debt collection:
You don’t have to use a debt collector
Many business owners are under the impression that the only way to collect debt is to hire a debt collector. Although this is an easier, less stressful route, it’s not the only way. If you’re worried that a debt collector could strain strong customer relationships, you can try handling debt collection yourself. As a business owner, you’re allowed to write
debt collection letters and make phone calls in order to collect on past due accounts – as long as you follow all of the laws and regulations surrounding debt collection.
Customers can work with you directly to settle their debts
Even if you enlist the help of a debt collector, your customers are still able to work with you directly to settle their existing debt. Maybe they experienced some sort of financial hardship that prevented them from paying on time, or maybe they simply forgot to pay their bill. Sometimes, it’s easier to let them pay you than to send their bill to collections. If you’re worried about straining a relationship between you and an existing customer, this may be a better option for you.
Debt collectors cannot call your customers at work if they’re asked to stop
You may be concerned that if you hire a debt collector, your customers will be harassed in the middle of the night or at work. The Fair Debt Collection Practices Act (FDCPA) states that once someone tells a debt collector their employer doesn’t allow them to take personal calls while at work, the debt collector must stop calling. In the 2011 annual report to Congress about FDCPA complaints, the Federal Trade Commission received more than 17,000 complaints related to debt collection calls at work. Although some debt collectors hope that you don’t know this law, most reputable debt collectors will stop calling at work once they’re asked to stop.
Not all debts are collectible
Every state has a statute of limitations that makes debt of a certain age not collectible. In most states, the statute of limitations is somewhere between four to six years from the date you last made a payment. If debts are older than that, they may not be collectible. As a business owner, it’s important that you hire a debt collection agency sooner rather than later if customers aren’t paying their bills on time. Four to six years may seem like a long time, but time can easily get away from you.
Although there are many horror stories about debt collectors harassing customers, most debt collectors are reputable and play by the rules. Utilizing a debt collection agency can be incredibly beneficial to your business. It gives you the ability to focus on other business operations while someone else helps you recover your money faster.