You did your part by providing your expertise (or materials) to satisfy a customer’s needs. When it was time to get paid, you sent an invoice, then another, a letter, a couple of emails, and then left a few voice messages too. The client that was once responsive and chatty during the sales process is now not replying to any of your attempts of communicating. And they aren’t paying you either.
When businesses are ignored by customers with outstanding balances, oftentimes they feel they have no other choice than to send the unpaid accounts to a collection agency. Once the debtor receives the collection agency’s First Demand (Debt Validation Notice) in the mail along with subsequent phone calls, there is a good chance the radio silence will end and the debtor will reach out to you. Then what?
Some creditors will cease all communication with a customer once their account has been sent to a collection agency and if contacted, they will refer them to the agency working the account. This is certainly our recommendation. These creditors often feel that they’ve exhausted their own internal efforts attempting to collect, and since they will be paying the agency anyway, they don’t want to spend any more time or effort getting caught in the middle of the collection process.
Other creditors will take or return the debtors’ calls. Most people know the biggest obstacle in debt collections is getting the opportunity to communicate with the debtor. So, when a debtor is willing to talk, hitting the hang up button may not only be a difficult thing for many creditors to do, it’s impossible. This is where a creditor should be cautious. Some calls between debtor and creditor lead to meaningful conversations and sometimes an opportunity to be paid. If the creditor agrees to communicate with the debtor especially early on in the process and the debtor has called asking to remedy the collection account, the creditor may accept payment. However, like I said earlier, you need to exercise caution. We’ve seen creditors—on more than one occasion—talk to debtors and accept a pay off or payment plan that was far less advantageous for them than the one the debtor already agreed to with the agency. Many times debtors will reach out to see if they can get a ‘better deal’ from the creditor. This happens more times than you think, especially after taking a debtor to court. A debtor with a judgment against them will sometimes reach out to a creditor and offer to pay their bill in full. Unfortunately, since fees, court costs, statutory interest, and sometimes RAF have been added to the amount due, paying the original amount owed will no longer pay off their account. If a creditor has signed a Permission to Sue request on one of their debtors, the creditor should always refer that debtor back to the agency handling the suit. There are just too many cogs in that wheel for a creditor to know what’s going on. Always refer them back.
Regardless of whether you are a creditor that will communicate with a debtor in collections or not, frequent communication with your collection agency is very important. Remember, any payments you receive from debtors in collection must be promptly reported to your collection agency.
A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners. Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 12 years.