One of the biggest challenges for any Credit Manager in managing their Accounts Receivable is to know exactly when a past due account should be placed with a commercial collection agency. For some Credit Managers, it may be the sheer dollar size of the past due that has them concerned. For other Credit Managers, it may be the internal DSO expectations or percentage of 90+ delinquency days past due. Finally for the most astute Credit Managers, with their pulse on their A/R, it may be something as simple as a sign exhibited by the past due customer that can lead to making this critical decision.

As a Credit Manager, what would you do if a customer bounced a check on you? Then when you call them to make that check good, you get voice-mail. You leave a stern, straightforward message about the check but two weeks later, the check is still not good. Now what? You send an e-mail; you leave another message or two but still no payment. This is just one of many scenarios that can occur even to the best Credit Managers that warrant making that decision to place the account with a commercial collection agency.

Here is a checklist of just some of the warning signs that require prompt action to place your past due customer with a Commercial Collection Agency:

1. NSF Checks – A customer bouncing a check to a vendor is never a good sign. It could mean several different things such as the customer is living on the edge, robbing Peter to pay Paul. In many cases, a customer of theirs didn’t come through with money they owed so it affects your customer and how they pay you. Look at an NSF check this way – you already collected this account once. Don’t spin your wheels doing it again, get an agency on this account sooner rather than later.

2. Talking Bankruptcy – Give your past due customer a test. Ask them the following pointed question: Would you consider filing bankruptcy? Listen closely to their answer. It is extremely telling if they say something like: “I don’t even have enough money for an attorney to file bankruptcy”. If they tell you they are simply waiting for one or some of their clients to pay, ask them for the names of those – if they gladly give up that information, you should feel some assurance. If they hem and haw or flat out refuse to give you any info, red flag.

3. Skips Scheduled Payments – You diligently work your past dues right as they become past due and you get a customer on a payment plan. Good for you, great job. It’s that time of the month for that customer to make payment #3, and they can’t or won’t make that payment. Regardless of the reason, cash flow, forgot, something unexpected came up, it doesn’t matter. Be proactive; place this account with a commercial collection agency.

4. Credit Card payments are denied or reversed – This is a plastic NSF. See # 1 above.

5. Threatens never to buy from you again if you persist or escalate collection efforts – It’s one thing to fall behind to your vendors, it is quite another to threaten the loss of your “business” if that vendor actually wants to be paid for their product or services. Don’t hesitate on this one. Place them immediately with commercial collection agency.

6. Continuing to buy from your competitors – This one stings twice. Not only are they NOT paying you but now they are using the money they should pay you with to buy from your competition. The warning here is if they didn’t generate the revenue with the product/service they ordered from your company, what makes you think they are going to raise their cash flow with your competitors products/services. Even if they do generate some money, which vendor do you think they’ll pay?

7. Communication doesn’t exist – You have been sending your reminders, your escalating demand letters and making your phone calls, possibly even sending e-mails and your customer is not responding. Unless they are in a coma (and you are going to want to see a Doctor’s note) this is a telltale sign. No company has only one vendor. If they have ceased all communications with you, chances are they are being inundated with other collection calls; letters or e-mails and they are ignoring everyone.

There are more signs that are self explanatory:

– Over 90 days past credit terms

– Says they are selling the company and will pay upon finalizing sale

– Refuses to sign a personal guarantee when not paying within agreed upon terms

– Claims will have to go out of business if actions are taken against them

– Claims product was defective or other dispute after collection process begins

– Breaks promise or simply lies to you

Proactive Credit Managers know their customers well. They understand when something out of the norm occurs it may be a warning that something bigger is amiss. These are the Credit Managers that seem to find themselves ahead of the curve and protect their interests well. Placing past due accounts with a commercial collection agency is an important step. It is preferable to work out a reasonable solution with your customers but as we all know there are instances when this cannot be done. Knowing the signs to look for will give you a step up and in the long run make you look good to your Executive team.

If you have customers who have become past due and are showing any of these warning signs, now is the time to get a small business collection agency involved to help you get these accounts paid!

For more information, visit Aidex Recovery Group at http://www.aidexgateway.com or call us toll free: 866-630-2694 so we can start recovering your money for you today!

Dan Herrejon is the Director of Operations at Aidex Recovery Group http://www.aidexgateway.com and has over 30 years of experience in the collection industry.

Dan Herrejon is the Director of Operations at Aidex Recovery Group http://www.aidexgateway.com and has over 30 years of experience in the collection industry.

Author Bio: Dan Herrejon is the Director of Operations at Aidex Recovery Group http://www.aidexgateway.com and has over 30 years of experience in the collection industry.

Category: Business Management
Keywords: commercial collection agency, small business collection agency, florida collection agency