Every business owner wants to make a profit. That’s why you’re in business in the first place, right? There may come a time when your customers don’t pay on time, or even worse, don’t pay at all. You may be tempted to shrug it off if it only happens once or twice, but what happens when it keeps happening? Maybe you try calling your customers or decide to send them collections letters. If they still don’t pay, your best bet is to hire a debt collections agency.
Hiring a debt collection agency may seem like a daunting task, especially if you’ve never done it before. However, it’s important to remember that your cash flow is at stake. You have money to collect, and a professional debt collection agency is trained on how to collect on past due accounts properly and legally.
The biggest mistake that business owners make it to put off hiring a debt collection agency. The longer you wait, the less likely you are to get paid. If you’re wondering when it’s time to hire a debt collector, the general answer is always sooner rather than later. It’s okay to give your customers a little bit of time, but after 90 days, the probability of collection on past due debt goes down dramatically.
Plus, there’s a statute of limitations when it comes to collecting debt, and if you wait too long, you may not be able get paid. In Florida, the statute of limitations is between four to five years, depending on the type of contract involved.
Benefits of hiring a debt collection agency
Even if you don’t want to hire a debt collection agency, doing so can be beneficial for your business. Contacting customers can take a great deal of time, but by hiring a professional, you and your employees can devote your time and energy to other important tasks. The time you save can be used to implement new policies and procedures regarding payments, educating customers about payment options, or focusing on other tasks that need to get done.
Using a collection agency also improves the chances of your customers paying in full, and a professional will even help you get your money faster. A good debt collection agency knows how to collect on past due accounts, and they know how to do it legally. When they contact your customers on delinquent accounts, their main focus is helping you get your money back.
Reasons why business owners wait to hire a debt collector
Many business owners wait to hire a debt collection agency. There are a number of reasons why you may wait to hire a debt collector, including:
- Reputation: You may be worried that when you use a debt collection agency that it will ruin your reputation. Maybe you’re afraid that your customers will have a negative opinion of you or that it will ruin relationships with your customers. The truth is that most people will respect a business that has a structured approach to collecting debt.
- Cost: Like with any other service you outsource, there’s a cost involved with hiring a debt collector. Many businesses avoid hiring one for this reason alone. Debt collectors usually receive a percentage of the amount recovered; meaning most of the money will still go back into your business. If you don’t use a collections agency, you may not get paid at all.
- Loyalty: Many businesses are loyal to their customers, even when they stop paying their bills. It’s okay to be loyal to your customers, but there comes a time where your customers need to be reminded of how important it is that they pay their bills and the impact not paying has on your business.
- Pride: If you don’t like asking for help, you’re not alone. Many businesses are reluctant to call in outside help because they’d rather do it on their own in order to stay in control. If you want to do this, make sure you decide when you will call in outside help.
When trying to collect on past due accounts, one of the best things you can do for your business is to hire a debt collection agency. Debt collection agencies are experienced in collecting debt and will do so in a professional manner. Remember, the longer you wait to hire a debt collector, the less likely it is that you’ll get paid.