November 13, 2012

Why you shouldn’t wait too long to hire a collections agency

One of the most common mistakes companies make is waiting far too long to hire a collections agency to handle their past-due accounts, small business advisers say. The problem is that the older a past-due invoice, the less likely it will get paid.

Yet the first inclination among entrepreneurs when dealing with customers they don’t want to lose is to give them more time to pay. The thought is that eventually, the client will come up with the money. In other cases, business owners worry about angering a client by assigning them to a collection agency. But waiting because of either of these reasons often results only in failing to collect on money that’s due to your business. And failing to collect is a top reason behind many small business failures.

So what should you do instead? Once you have waited a reasonable amount of time for your customer or client to pay - setting up specific guidelines and sticking to them is a good idea -  consider turning over the account to a professional. Good collection agencies have the time and expertise to recover outstanding debts that your small business isn’t able to collect on its own.

Where to start? Here’s are great story from the Fox Small Business Center.

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