{"id":1358,"date":"2020-10-27T16:21:01","date_gmt":"2020-10-27T16:21:01","guid":{"rendered":"https:\/\/midwestfidelity.com\/solutions\/?p=1358"},"modified":"2020-10-27T16:24:57","modified_gmt":"2020-10-27T16:24:57","slug":"things-to-consider-when-dealing-with-unpaid-invoices-for-your-small-business","status":"publish","type":"post","link":"https:\/\/midwestfidelity.com\/solutions\/things-to-consider-when-dealing-with-unpaid-invoices-for-your-small-business\/","title":{"rendered":"Things to Consider When Dealing with Unpaid Invoices for Your Small Business"},"content":{"rendered":"
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Dealing with past due invoices is part of any business, large or small.\u00a0 How each company deals with them can make a significant impact on overall profit margins.\u00a0 Nothing magnifies this more than the economy slowing down.<\/p>\n

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So far, 2020 has proved how important staying on top of your receivables process is.\u00a0 Moreover, how important it is to have a plan in place when accounts head south.\u00a0 Having your own employees chasing past due accounts takes them away from their role within the company and more than likely will do nothing more than frustrate them.\u00a0 The first contact made after an invoice becomes delinquent often times determines whether or not the bill ever gets paid.\u00a0 Coming across as nonchalant may lose any urgency for the consumer\/business to get the account paid.\u00a0 The more time that passes, the less likely the invoice ever gets paid.\u00a0 Coming across harshly can create animosity towards the company and again delay payment or result in the invoice going unpaid as well.<\/p>\n

Collection agencies have been around since the creation of the invoice.\u00a0 Giving the consumer time to pay is a necessary part of most businesses.\u00a0 It\u2019s almost inevitable that some of these accounts will become delinquent.\u00a0 Agencies have been a proven resource to help recover past due invoices.\u00a0 They serve both large and small business and help ensure their right to get paid.\u00a0 States have their own laws governing debt collection practices.\u00a0 In many states, these laws apply to the original creditor as well.\u00a0 Violating these laws can result in a costly expense for the business.\u00a0 In a land where lawsuits are common, its better left to an agency that understands these laws and takes on the risk.\u00a0 Whether or not the lawsuit is legitimate or frivolous, there can be an enormous expense involved to protect the company.\u00a0 No industry understands this better than the healthcare industry.\u00a0 Professionals within this industry have insurance that helps protect them.\u00a0 It\u2019s common for most medical practices to have an in-house process to deal with past due invoices, and it\u2019s also a standard practice to transfer delinquent accounts after 90 days.\u00a0 The healthcare industry understands the importance of time and usually follows a strict timeline for turning over delinquent accounts.<\/p>\n

Most businesses carry both business to business (B2B) along with consumer debts (B2C).\u00a0 Collecting each type of these debts requires a knowledge of both and the process is completely different.\u00a0 Business debt recovery is made by phone calls with legal action available once collection efforts have exhausted.\u00a0 Recovering consumer debt involves a letter series as well as agents calling the accounts.\u00a0 Most collection agencies work solely off a contingency fee.\u00a0 Typically, the fee charged on B2B is less than you will find on B2C debt.\u00a0 In both cases the contingency fee is based on factors such as the age of the debt and overall dollar amount.\u00a0 The older the debt, the higher the contingency fee.\u00a0 The recovery rate for business accounts is typically higher than consumer accounts with business debts around 60% and consumer around 30%.\u00a0 Again, recovery rates on viable debt are highly dependent on the age of the debt.<\/p>\n

The biggest mistake made when choosing an agency is finding one that charges the cheapest rates.\u00a0 We get what we pay for right?\u00a0 In many instances an agency with lower rates also has a revolving door with employees coming and going.\u00a0 A good reputable agency will retain seasoned agents and have no place for rouge and under-trained or inexperienced agents.\u00a0 An agency that charges more on contingency will in most cases collect more.\u00a0 Thereby, remitting more money back to their clients.<\/p>\n

A good reputable agency will also do their own due diligence on the clients they bring aboard.\u00a0 It is just as important for the agency to accept debt from a viable company as it is for the company to find a solid viable agency.\u00a0 Any such agency will do the necessary skip tracing and background checks one any placed accounts before a letter is ever mailed or a phone call is made.\u00a0 These agencies will ensure that they weed out any bankruptcies or litigious consumers.\u00a0 Not only does this help in the success rate, but also helps eliminate any costly lawsuits.<\/p>\n

It\u2019s always beneficial to find an agency that is licensed to collect nationally.\u00a0 If there is a case where the individual has moved to another state and it\u2019s important that the agency assigned has the state knowledge and license to pursue the debt in that state.<\/p>\n

There are well over 5,000 debt collection agencies within the United States.\u00a0 Always ensure that the agency you choose is FDCPA, FCRA, and HIPAA compliant.\u00a0 Review their Better Business Bureau reviews and ratings.\u00a0 A good agency will work hard to keep the relationship established between their client and the consumer whenever possible.<\/p>\n

Troy Funk, Business Development<\/p>\n

Midwest Fidelity Services, LLC<\/p>\n<\/div><\/div><\/div>

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