For every business, minimizing the time and resources it takes to collect outstanding debts is critical to their success. Sometimes, despite the best efforts of your accounts receivable team, you may find yourself with delinquent accounts that you just can’t seem to collect.
That’s where a collection agency comes in.
But when does it make the most sense to hire a collection agency? Let’s break down the signs.
You have a solid collections process, but you still have overdue accounts
If you don’t already have an internal collection process in place, it’s time to implement one. This should be a process that is initiated as soon as an account becomes overdue. However, even with a well-functioning internal process, you may still find that many customers still don’t make payments on time. When you find yourself in this situation, it’s time to bring in a collection agency.
Your internal process is complete, but accounts are still delinquent
The general rule of thumb is that once an account becomes 90 to 120 days delinquent, it’s time to involve a collection agency. This is because at this point, your in-house collection efforts have been exhausted, and a third party agency may be able to provide the additional resources needed to recover the outstanding debt.
Keep Learning: Here’s how to send someone to collections
You have delinquent accounts with missing or invalid contact information
If you find that you cannot contact the delinquent customer because they have changed their phone number or address, you may need a collection agency to help you track them down. There is no need to wait until the account reaches a certain age to involve an agency, especially if that customer’s contact information is no longer valid.
Keep Learning: How to find a good collection agency for your business
The customer is refusing to pay and all internal efforts have been exhausted
If you’ve tried to reach out to a customer multiple times and they are refusing to pay, it may be time to involve a collection agency. You can be sure that the agency’s expertise will come in handy at this stage. They can provide guidance on legal avenues you can explore to recover the debt or legal options in order to garnish wages or place a lien on assets.