Don’t take this personally…But you personally owe me money!

I would never recommend this telephone approach to collect an unpaid invoice, however, I know this is what many small business owners are thinking when making that call for payment on a past due receivable.  You work hard and spend your money on materials to assist your customer, and now you are calling to be paid after being ignored for too long. 

A big challenge for some small business owners comes when it’s time to be paid.  Fortunately, with a little preparation, you can speed up your revenue cycle, and develop the business radar that sounds off when an account is headed for collections.  Using effective communication techniques, and working with financially troubled clients through tough times, you may end up with devoted customers for life.

Late-paying customers usually fall into one of three categories.  1. Customers who are willing to pay and acknowledge they owe you. But because they have real financial problems, can’t pay on time.  They are typically willing to communicate.  2. Customers who prefer to delay payments. They may send you a little bit here and there, and will avoid you if possible.  3. Customers who avoid any payment. They will break promises to pay you and they may even skip town.

You may be able to manage debts in the first two categories by convincing the debtors to make partial or full payment.  But you need to recognize what type of debtor you are dealing with, and do so as quickly as possible. Even though asking for money can be an uncomfortable, don’t delay. The longer you wait, the harder the money will be to collect. Prioritize those debts you can work on internally. Those debts, if any, you determine will be too time-consuming or too costly to work in-house can then be sent to a collection agency.

One rule always applies to effective collections: Get busy as soon as possible and stay on the account until you’re paid.  Send bills promptly and re-bill monthly.  Send past due notices promptly once an account is overdue.

Here are some more tips:

  • Don’t harass. But let the debtor know you follow these matters closely. Don’t leave more than one phone message per day for a debtor. No threats!
  • When making a collection call, be direct, listen, and don’t get personal. Keep your calls short and be specific. Always stay calm but always maintain a sense of urgency about getting paid. Prevent the debtor from taking your call for payment as a personal affront. It’s not personal. It’s business.
  • Write demand letters. Along with phone calls, send a series of letters that escalate in intensity.
  • Be creative. If the customer has financial problems, ask what amount can be realistically paid. Consider extending the time for payment if the customer agrees to a new payment schedule. Monitor the payment agreement.

It’s imperative to recognize what debt accounts will become delinquent and turn the debt account over to a collection agency pronto. Turning a debt over to collections can save you time and money, not to mention the aggravation of dealing with those unwilling to pay.  The sooner your collection agency is able to begin working on a debt account, the more likely a collection will be made.  When the debt account has gone unpaid for too long (90-120 days), chances are the debtor has broken more than one promise to pay you, or the debtor has skipped town. It’s time to turn it over without further delay.

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 10 years.

Food for Thought: What to Do About Unpaid School Lunches

I just read an article in the Minneapolis Star Tribune about how the largest school district in the state of Minnesota is planning on hiring a collection agency to help them retrieve $160,000 (from families owing $100 or more) for unpaid school breakfasts and lunches.

If you think this district’s struggle is an isolated big-city issue, think again. The national School Nutrition Association indicated in its “State of School Nutrition report 2014” that over 70 percent of districts had unpaid meal debt in their school nutrition program at the end of the 2012-2013 school year (averaging about $2000 per district).

Not only is the problem widespread, it’s also growing. The Anoka-Hennepin School District, the one featured in the article, is concerned because there is debt accumulating in the middle schools at levels higher than currently seen for high school seniors who’ve had their entire school career to amass their debt. In the 2011-2012 to 2012-2013 school years, the districts meal debt increased 6 percent. Between 2012-2013 and 2013-2014 school years the debt skyrocketed 61 percent and increased again from the 2013-2014 school year to the 2014-2015 by 48 percent.

With increases like the ones seen above, it’s easy to see why school districts across the country feeling the pain of these (and other) unpaid student debts are done hitting their heads against the wall and are turning to the experts—debt collectors—for help.

The article explained that the Anoka-Hennepin school district doesn’t have a contract with a collection agency yet and said they will offer families a payment plan before sending them to collections. “There needs to be at least some good-faith effort,” said school board Chairman Tom Heidemann.

“If the case is you don’t even respond to us, we know that you’re not going to help out with the situation,” said Noah Atlas, the district’s child nutrition program director. “We don’t feel there’s any other recourse at this point.”

The thing is, the school district needs to understand whether it’s an ability to pay problem or a willingness to pay issue. Like health care providers and other businesses, they do not want to involve a collection agency if they don’t have to.  If you owe an outstanding debt to your school district, ignoring pleas for payment will not make the debt go away and it may likely be sent to collections.  Communication is key. If you are having financial difficulties know you’re not alone. I know it may be uncomfortable to make that initial contact, but most creditors once they realize you are making an effort to pay will be happy to work with you to set up a payment arrangement you both can agree upon. And it will feel great to have the debt taken care of instead of hanging over your head. 

According to the Star Tribune article, there is no standardized way school districts handle debt from unpaid lunches and policies vary around the country.  District officials at Anoka-Hennepin decided not to involve the kids. “We are trying to keep this adult-to-adult,” said Atlas. “We don’t turn students away from the meal.”

The Minnesota Department of Education wrote in a 2014 memo that price-reduced or paid meals must be available to eligible children if they have money in hand, but they also added that a school “may take legal action against a household which has not settled its food service debt.” 

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 10 years.

Time is Money When it Comes to Effective Revenue Recovery!

“Do not put off until tomorrow what can be put off till day-after-tomorrow just as well.” –Mark Twain

Do you procrastinate? Ok, you don’t have to answer that. I will for you. Of course you do. We all do. I certainly know I do. Just ask my wife about the paint job for our master bath! And the drippy kitchen sink. And the weeds in the lawn…well, you know.

Yet, isn’t it a great feeling to finally face that not so fun task that has been on your ‘do’ list for months, complete it and cross it off? The reward of a feeling of accomplishment—a job well done—is terrific. Of course it is usually followed by the realization that had we simply done it sooner the building stress that comes from putting things off would have gone away much sooner and in its place we could have been doing things which we find much more pleasant.

There are lots of definitions for procrastination, none of them particular complimentary to us who do. I am partial to Twain’s quote, but let’s face it that won’t feed the bulldog!

Generally speaking, procrastination is when we substitute one activity we prefer for one we do not. As a result the one we like gets done fast while the other, perhaps even more important task, is moved farther and farther away. Like blog posting when the sales forecast is due! And there are certainly no limits to the distractions we all have right here on our desktop.

To maximize the effectiveness of revenue recovery and delinquent account collections procrastination can be costly. There is an old saw in the business which goes: “The older they are the farther they go.” There is much to that, and may impact your recovery rates dramatically if you are not able to manage your delinquent placements on a timely basis.

We realize delinquent account recovery is a serious business, but sometimes it is easier to believe if the accounts just sit there sooner or later the debtor will pay directly without third party intervention. The fact of the matter is that even with the most optimistic perspective that does not happen very often. There is a direct and inverse proportion between age of an account and prompt debt collection.

So what do you do?

• If the elephant is big, just take one bite. Even if it is just a single account send it on! That takes one more thing off your desk and starts our process of recovery right away.
• Prioritize your day and make those less desirable tasks something you handle first thing. That way, you have a fresh perspective and fewer interruptions as the day goes on.
• First things first: Keep a manageable and organized task list. When our ‘do’ lists get too big or too detailed it is easy to get disorganized, discouraged and distracted. Review your list early in the day and rework your daily priorities focusing on the top three to maximize your use of time.
• Make sure your delinquent accounts are turned over as soon as possible. The sooner we get them, the sooner we start the process and the higher probability you will receive timely collection of your debt.
• Things don’t change unless you recognize there is a problem. If your priorities keep getting pushed off for the next day, take a close look at how you use your time. Are there unnecessary distractions which get in the way of tackling the hard ones?
• Reward yourself when a task you don’t like is done! There is nothing wrong with patting yourself on the back when you get something done, especially if it is a task you were not looking forward to handling. Take a break, or spend a few minutes on those other more pleasant tasks which would have normally been distracting you.

At A. Alliance we strive to make your interactions with us as easy and straightforward as possible. In an increasingly complex world, keeping things simple is a goal we strive for every day. Can we help? Let us know. We are here to serve you.

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 10 years.