It’s understandable if you feel a little frustrated right now as a business owner. Like many businesses, you may have adapted to the current COVID-19 crisis. You may even be hitting your sales targets. However, you may have trouble collecting payments from your commercial clients. And with a weak accounts receivable turnover ratio, you may feel that your business is struggling through no fault of your own.
For example, in the age of physical distancing, many businesses are adapting to the digital medium with great success. Certain hotels and restaurants are embracing their own digital delivery models by investing in robust websites to capitalize on new opportunities. Likewise, retail businesses are also offering online services to hit their key performance indicators.
However, it takes a wealth of resources to make a digital shift. Not only must you invest in digital portals, but you may need to retrain your staff or hire captains of the digital industry.
If your commercial clients are failing to pay you on time or at all, then you may lack the critical cashflow required to adapt to this new normal.
Error #1: Hiring the Wrong Type of Collection Agency
The first critical error you must avoid is to hire the wrong type of collection agency. Remember, there are consumer debt collection agencies and commercial debt collection agencies — consumer debt collection agencies collect debts owed by regular consumers to business, while commercial debt collection agencies, also known as business to business debt collection agencies, specialize in collecting revenue owed by businesses to other businesses.
While there’s some overlap, the two types of collections require different skillsets.
As a premier commercial debt collection agency in the United States, at Summit A*R we draw on several strengths to collect your hard-earned revenue:
- Reputation: We’re proud of our powerful reputation at Summit A*R. Sometimes, our campaign of official demand letters and phone calls is enough to close the account in your favor because businesses know us.
- Credit Reporting: Unlike your in-house collection team, our licensed debt collectors can report businesses to the three major credit bureaus: Equifax, TransUnion, and Experian. Credit scores are essential to businesses because they affect their ability to pass background checks. In economic uncertainty, businesses try to maintain pristine credit histories in order to secure vital loans. They usually clear their debts when they realize that their credit could be adversely affected because of delinquency.
- Full-Scale Litigation: At Summit A*R, we’re happy to say that we’ve recovered some exceptionally challenging debts over the years where other agencies have failed. Aside from our reputation and credit reporting tools, we also have full-scale litigation abilities to recover money from challenging debtors. Our litigation team is led by a licensed attorney. In addition, we have experienced agents who can perform financial investigations to determine the feasibility of legal action. Of course, any legal action is taken with your consent.
Error #2: Using the Wrong Tone
When the due date passes, it’s typical for you to send a polite reminder on the phone or email to your commercial client. If they fail to respond, you may send more reminders. If this doesn’t work, you may visit them in hopes of getting paid.
As your attempts to collect what you’re owed fail, you may start to feel under pressure, especially during these trying times. As tempting as it may feel, the worst thing you can do is use the wrong tone with your debtor.
At Summit A*R, we use a “P.H.D. Philosophy” (Preserve Human Dignity) and treat every debtor with dignity and respect, even if they’re uncooperative. Not only is our methodology good for your business relationships and your reputation, but it’s great for your bottom line.
Over the years, we’ve noticed that most customers respond more positively when they’re treated with humanity. Remember, there are hard-working people behind these businesses that owe your company money.
So, never threaten or harass your debtor. Always maintain a professional tone. Keep in mind that the business that owes you money may be going through a testing period. Once they recover, they may become your best client!
If you can, give your debtor options. Perhaps they can pay you in installments, or maybe they need an extension. Consider forgiving late delivery fees. Add some bonuses if you can. To learn more about collecting debt during times of economic uncertainty, read these 6 tips to help you get paid on our blogs section. With the right tactics, you can recover your revenue without losing the confidence of other businesses.
Error #3: Wasting Time
Although it’s essential to maintain a professional tone with your debtor, it’s also critical to learn how to read the room. If your customer’s business is going through temporary setbacks, yet they’re eager to pay their dues, then it’s a good idea to cooperate with them.
However, if they have started to fire their employees, refuse to talk to you, are losing stock value, are part of a vulnerable industry, or owe other businesses money, then it’s advisable to act quickly. Remember, various studies suggest that debt grows harder to recover with time. Stay informed — here are 10 warning signs to look out for from your debtor.
You want to partner with a debt collection agency like Summit A*R before you are beaten to the punch by other creditors. If your debtor has nothing left, then you may have to write off your debt. If you’re interested in partnering with us, then check out this useful FAQ about the collection process that’s published on our platform.
Many businesses under economic strain refrain from hiring debt collection agencies because of the fees. Rest assured that at Summit A*R, we only get paid when you get paid. We don’t demand any payment upfront. What’s more, our rates are reasonable.
We also don’t demand a minimum number of accounts to start our relationship with you. Whether you have one past due invoice or dozens, you can use our services to put your company back in the black. Connect with us today through our website to learn more about our commercial debt collection services.
Categorised in: Our Blog
This post was written by Summit A•R