While collecting overdue payments from another business is always complicated, it’s especially tricky nowadays. As the novel coronavirus adversely affects business, companies suffer cashflow issues and fail to clear their invoices on time.
Your goal is to recover your revenue without damaging the relationships you’ve carefully nurtured over the years. At Summit A*R, we’ve been in the debt collection industry for a long time and have helped countless companies from various industries achieve their collection needs.
We exist for the sole purpose of reuniting our clients with their hard-earned revenue in the most efficient, ethical and cost-effective manner. We do this while adhering to strong core beliefs and values.
Drawing on our expertise, we’ve compiled a list of collection mistakes during the pandemic you should avoid in business-to-business debt collection:
#1 Don’t Overdo It
Sometimes, business to business collection is a careful dance. You want to apply the right amount of pressure to earn a favorable outcome. Calling your late-paying customer too often, sending a barrage of emails, or visiting them at different hours of the day is counterproductive.
#2 Don’t Underdo It
As we’ve said many times before, debt becomes harder to recover with each passing day — with each week; it becomes more likely that the overdue payment will turn into bad debt. To avoid writing off the debt, you must exert the correct level of pressure.
While you shouldn’t overdo it, you shouldn’t underdo it either. Periodic reminders are critical in the debt collecting industry.
#3 Don’t Stop Negotiating
Don’t stop negotiating, especially if your situation is critical. You must be frank with them if you urgently need your invoices to be cleared. Tell them that your operational expenses must be met, and they need to agree to a payment plan.
Nowadays, many businesses can get bridge loans to pay their debts and operational expenses until they recover. Companies have many options if they’re serious about meeting their financial responsibilities.
#4 Don’t Take Undue Risks
When business is slow, companies sometimes take undue risks to attract new business. Please always take the following steps to reduce your risks when serving new customers.
- Conduct thorough background checks of the entity before you start a business relationship with them. Check their references and their business credit report for red flags. Avoid working with companies that already owe other vendors money, aren’t paying their employees salaries, or have high revolving credit.
- Consult with a lawyer to develop a contract that protects your interests as a preemptive measure. Use good invoicing practices to shield your company from issues down the road. Accept post-dated checks and deposits to enhance financial security.
It would help if you also learned to spot the warning signs when dealing with debtors.
#5 Don’t Get Too Friendly
We always advise businesses to maintain a professional relationship with their customers. A frustrated, aggressive, or threatening tone is counterproductive and is less likely to achieve results. At the same time, you must not get too friendly with them.
When a business relationship gets too comfortable, creditors find it challenging to apply the right level of pressure required for revenue recovery.
At Summit A*R, we have several tools to recover payments, including credit reporting, skip tracing, and legal resources. However, we also choose to treat everyone with compassion, respect, and the dignity that we believe everyone deserves.
#6 Don’t Ignore the Nuances of your Industry
Please remember that every industry is different. Certain debt collection rules may not apply to you. For example, if you’re part of the real estate industry, then all the tools of the trade may not be available to you when dealing with a commercial tenant.
In many states, renters have been granted protective measures due to the harsh realities of the COVID-19 pandemic. However, as a landlord, you may have access to certain loans and grants to protect your rental property business. Please read this list of landlord collection mistakes for more tips.
#7 Don’t Hire the Wrong Collection Agency
Hiring a collection agency is an excellent idea if we do say so ourselves, to put your books back in the black. But choose a debt collector for your business wisely. It’s critical to hire the right collection agency for the following reasons:
- A bad debt collector may use aggressive tactics and hurt your reputation and relationships in the business community.
- An incompetent agency may render your debt irrecoverable.
- A less than truthful debt collector may not be upfront with you about their fees and could leave you with nothing after collecting payment.
As a fully licensed commercial debt collection agency — we deposit all payments into a state-regulated client trust account. The net amount due to your company on payments made, in any single month, are sent to you on the 10th of the following month.
However, if a consumer pays you directly in response to Summit A•R’s campaigns, you must notify us immediately so that proper credit can be given to your customer. We will bill you directly for these fees.
Our typical compensation involves contingency fees of between 7.5% and 50%. Contingency fees ensure that your company is not throwing good money after bad; we are only paid if we are successful. Compare this to other agencies that charge an upfront fee and require you to place a specified number of accounts on a monthly or annual basis. At Summit A•R, our contracts do not contain any quotas or minimums.
Some debts can be collected within the first few days, while others may take longer. Our goal is to get you paid within 90 days.
Additionally, during our 25-year history, we have prided ourselves in the way we conduct business. Along with being members of the local Better Business Bureau, we also have an excellent reputation in dealing with people with a level of professionalism rare to our industry. We carry an impeccable compliance record with all regulating agencies nationwide.
You can count on us to handle your accounts with respect and integrity while also maximizing the returns your company deserves.
Please get in touch with us today. Request a callback, email us directly at email@example.com, or call us at (888) 222-0793 to speak with one of our experienced collection experts.