If you run a business, you may end up asking yourself: when is it time to hire a debt collector? Whether you have many debtors or a few, the simple answer is sooner than later. In fact, statistics show that the longer you wait to call a debt collection agency, the less likely you will get your money back. More specifically, your chances of collecting a debt go down dramatically after just 90 days.
While there are many ways to go about sending invoices for payment reminders, there isn’t much you can do about delinquent debtors. As a tip, it’s best to start acting as soon as a payment becomes overdue. Contact the delinquent customer and request payment the day after an overdue payment. If they don’t respond after about 30 days of this reminder, it’s highly recommended you start looking for a debt collector.
Timing is Everything
If you’re thinking that 31 days is too soon to look for a debt collector, you may want to think otherwise. When it comes to collecting debt, timing is everything. In fact, timing is so critical that waiting even a week too long can determine whether or not you get your money back.
At first, you may give the delinquent customer 30 days to make a payment. However, it’s best not to wait longer than that allotted time frame. Once 30 days have passed without a payment, it’s time to take the debt seriously.
Things to Consider When Collecting Debt
Before acting to collect a debt, consider the following:
- How much the debtor owes you
- Your relationship to the debtor
- How important to your business the debt is
These things matter when it comes to hiring a collection agency to recover your debt.
Related: 8 Powerful Credit Control Tips for Your Business
The Amount of the Debt
When considering a collection agency, the amount of debt owed matters. For instance, if a delinquent customer owes you $10,000, it would be in your best interest to hire a collection agency. The more money you’re owed, the more swiftly you must act to recover what you can.
However, every business is different. For small businesses, even $500 is enough to act swiftly and with professional help. Ultimately, the decision is up to you and the best interest of your business.
Your Relationship to the Debtor
As a business, it’s extremely important to maintain a good reputation with your customers. This also applies to former or delinquent customers. An important thing to consider when hiring a collection agency is your relationship to the debtor, and their relationship with your business.
For instance, if your business has had a profitable and long-term relationship with the customer and their delinquency is new, you may want to find the reason for the overdue account. It could be due to medical or economic reasons, or something else out of their control. As a business, maintaining customer relationships is extremely important. If the debtor had a good reputation with your business up until this point, immediately hiring a collection agency may not need to be your first choice. However, after 90 days, a collection agency may be the right option.
However, if the debtor is someone you don’t want to do business with, you should hire a collection agency as soon as possible.
How Important to Your Business the Debt Is
If collecting the debt is of vital importance to your business, don’t wait. The sooner you hire a professional collection agency, the more likely you’ll get your money back. Once you’ve established the amount of debt owed and the relationship to the customer, debt collection is the next step.
Many businesses make the mistake of attempting to collect debt themselves, which drains resources. This is especially true for small to medium-sized businesses lacking proper collection staff. Instead of using your company’s resources to collect debt, hiring a professional debt collector will save time and money—literally.
Related: 6 Debt Collector Myths Debunked
Two Huge Indicators to Hire a Debt Collector Right Away
There are two huge indicators that tell you a debt collector is the only option: tricky or elusive accounts, and disappearing altogether. If any of these are the case, hiring a debt collection agency is the best and only choice if you want to get your money back.
Debt collectors are specifically trained to track down delinquent debtors who avoid paying. They know the right tools and methods to locate elusive customers and communicate with them in a way that encourages them to pay. Debt collectors apply the right pressure at the right time to get delinquent customers to pay up, and statistics show they’re far more effective than credit companies.
Southwest Recovery Services
Regardless of all things to consider, timing is by far the most important factor in collections. When you hire a collection agency sooner than later, you’re much more likely to get your money back.
Southwest Recovery Services is a collection agency that prioritizes ethics. We value your customer relationships and strive to collect your debt with kindness and professionalism. Our trained agents have decades of experience collecting debt for business, healthcare, utility, and real estate. We understand that each case is different, and we approach every one with careful consideration and powerful strategy.
For information on how to collect a debt today, contact us.