Did you write off revenue in 2008 and 2009?
I am always amazed to hear potential clients tell me they don't outsource their past due balances. It's amazing, because in most cases, it doesn't cost anything to place aged receivables with a 3rd party collections agency. Industry standard is you pay nothing unless something is collected. So there's the number 1 reason: You have nothing to lose and everything to gain!
Did you know? Once a debt is placed with an agency a letter goes out which puts the debtor on notice. They are informed that they have 30 days to cure the debt or
Collections agency place a fresh eye on your methods, policies, and major dispute issues. A good agency will give invaluable feedback regarding what your customers are saying about your invoicing, terms of service, customer service, shipping, and the list goes on. So there you have the number 3 reason: Fresh perspective and a temperature gauge of your operating procedures.
I hear many small business owners state they collect their own receivables. There is nothing wrong with that process; in fact it is a good practice to periodically touch base with what your customer service issues may be. On the flipside, it can be very tough for an owner to wear too many hats. The price charged to send out pre-collections letters may well be worth it when you consider how valuable an owner's time is. Statistics show the average wage for an owner is $75 per hour. The pre-collection approach works well, and can be a set-it-and-forget-it application. Business owners like this because it can be customized to get the best revenue return, and the rates on pre-collections are very reasonable. Now you have reason number 4: Save time, money, and stress by outsourcing early, pre-collection debt.
So, now let's talk about your resources. Do you have less people to collect more bad debt than you did two years ago? If you answered "yes" to this question, then you have the final top reason to hire a collections agency. Many agencies can shore up your in-house collections by performing certain functions your team is overloaded with. For instance, are your collectors performing tasks such as taking payments, making bankruptcy claims, setting up payment plans? Collectors make you money by being on the phones resolving payment issues, disputes, and contacting late payers. How much of their time could you free up if you outsourced some of the more menial and time consuming tasks that keep your collectors off the phones? Reason number 5: Keep headcount down, or even reduce it, by outsourcing time consuming processes.
So, if you don't currently use a collections agency, you might consider exploring the possibilities. There are different rates for different services, but in most cases the costs are offset by the time savings and the fact that instead of writing the debt off, you now have a real shot at collecting at least some of the original debt.
If you would like to learn more please visit http://www.ERDCollections.com