Recover Your Business Profits - Collect and Recover Money Owed

Is Your 3rd Party Leveraging VOX Technology to Reach Debtors?

2011-03-12T22:37:00.000-08:00

After reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business SHOULD have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

Even if you are a business who has concluded that a 3rd party profit recovery company should be used as Article #1 recommends, you need to make sure that your recovery success factor is maximized by choosing a 3rd party with the latest technology such as VOX to actually reach more debtors in person!

Everyone who has tried calling someone in recent years has realized how difficult it is to actually reach them in person. In fact, it is almost surprising to most of us when the person we are calling actually picks up the phone! You can attribute this “calling party-to-receiving party” de-personalization to advances in technology. Things like answering machines, voice mail, and caller ID have helped build the wall of isolation between those calling and those being called. When you think of law enforcement technology advances like radar and laser and think about how it has been thwarted with radar detectors and laser detectors then you realize that the best way to counteract one technology is with another technology. Well VOX is like the radar detector to use against the answering machines, voice mail, and caller ID that are like radar!

Getting a live person on the other end of the phone when calling is a lot like sales prospecting. Quite frankly, it is a probability versus numbers game. The more times you call then the more likely you are to actually get in touch with the actual person. Sooner or later they will answer because they will be at home at that time or they will not be so occupied that they fail to answer. Recent statistics have shown that it takes 7 calls to finally reach 1 live person and even then that contacted live person may not be the “right” live person!

So now let’s apply the “difficulty of reaching the right live person when making a phone call” topic back to how it relates to collections. Imagine that your collector is with one phone line and manually making calls to your 10 late past due debtors who owe you. Compare that to your friend’s profit recovery company which has 10 phone lines that are automatically being dialed to make calls to their 10 late past due debtors who owe them. Assuming every debtor who is talked to personally will pay the creditor, do you think you or your friend will be the first to be paid by just one of their 10 debtors? Well if it takes 1 minute to make each call manually and 15 seconds to make each call automatically then it would take 430 minutes for your collector to finally contact 1 debtor on average (calling debtor #1 thru #10 serially then repeating 7 times after a 60 minute wait period between each sequence). However, your friend’s profit recovery company would only take 362 minutes to finally contact 1 debtor on average (calling debtor #1 thru #10 in parallel then repeating 7 times after a 60 minute wait period between each batch). So your friend would be paid over 1 hour before you by the first debtor.

Well put simply, VOX is like this multi-line automated dialing technology case-studied above. However, it is even more. It can make the call without consuming any time from a real collector until a real debtor answers at which point it then immediately links a real collector with the real debtor. It can also track statistics and make them available to the creditor to prove which debtors have been called, how many times, when, and if they were actually reached in real time. VOX can also automatically call at industry determined best reach time hours. Even better yet VOX can adapt its calling patterns based upon debtor recorded response.

In summary, VOX is a high-technology cost-effective high-recovery tool for late past due money owed that can’t be ignored by any 3rd party unless that 3rd party does not plan on being in the business long. With large profit recovery companies having invested heavily in VOX and having installed hundreds to thousands of phone lines connected to it that are armed with hundreds of live college educated recoverers ready to talk to live contacted debtors, it is unlikely that many small collection agencies will be able to effectively perform with old “pick up and dial the phone” methods any longer.

Now that you know more about phone collection technologies like VOX, hopefully you will choose a 3rd party profit recovery company that leverages the right technology for your benefit!

To inquire about how you can work with a profit recovery company that uses VOX to achieve right party debtor contacts plus reaches 3 to 7 times more live debtors in the same fixed time than traditional collection agencies,

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #14 "Is Your 3rd Party Leveraging VOX Technology to Reach Debtors?"

Should Your Business be Using a 1st Party to Help Accelerate Slightly Late Client Payments?

2010-09-21T20:32:00.000-07:00

The 1st party is the creditor or business supplying the product or service.

The 2nd party is the debtor or client receiving the product or service.

The 3rd party is a company who is not directly involved in the product or service transaction but which is a vendor supporting the 1st party to acquire money owed from the 2nd party. Quite often a 3rd party is called a collection agency or a profit recovery company.

Now that terminology is clear, if the creditor is the 1st party then how can a 1st party be used to help accelerate slightly late client payments? Well the creditor can hire a company to politely represent them (outsource it) as if they are the creditor prior to going to a more firm 3rd party collections approach. Most creditors try to resolve late past due payments for months internally before finally turning the debtor accounts over to a 3rd party.

The good ones only work it internally for 2 to 3 months but unfortunately some work it longer. No matter what, virtually every business who offers credit spends a fair amount of time and effort working their late past due debtors with additional invoices or statements, letters, and phone calls. The Dartnell Institute, many years ago, showed that creditors on average spent $20 to $30 per late paying debtor trying to recover their money owed. Be assured, the internal collection cost today has risen well above this with estimates indicating that it costs $8 for each contact made to a debtor. So 5 contacts to get paid equates into $40 spent doing it! When the fully loaded cost is really analyzed by a financial person and the A/R department labor and benefit costs, mailing costs including paper and ink and postage, the phone costs, and associated overhead costs for things like floorspace and computer systems to support the A/R department is considered they will surely validate the total cost as being surprisingly high to do non-value-added internal collection work. Finally, this cost is incurred regardless of the actual recovery results obtained which can not be ignored.

Sometimes an outsourced 1st party is thought of as a billing company but in the context of this article we are not talking about simply sending open-loop the first invoice to a debtor who is not late per payment terms and waiting to receive payment. Instead we are talking about a closed-loop following up with debtors who are 1 day past payment terms to actively work getting payment. Do not confuse billers with cash flow accelerators. Best case, most billers simply send multiple statements but they do not write letters and make phone calls.

So to decide if your business should be hiring a 1st party cash flow accelerating company (not a biller) instead of doing internal collection work yourself, ask yourself these questions:

1) Do you struggle simply getting the first invoice out to non-late paying clients?

2) Do you get the second statements and letters sent out that you want to for late past due debtors?

3) Do you hate making collections calls and because of this find yourself never getting to them?

4) Do you not understand the legalities of asking to be paid without breaking the law?

5) Do you delay sending late past due debtors who are more than 90 days past terms to collections because you feel guilty you have not done proper followup in-house first?

6) Have you been thinking of hiring additional collection personnel even if just temporary or part-time?

7) Do you want to reduce the amount of clients sent to 3rd party collections?

If you answered yes to one or more of these questions then your business should consider hiring a 1st party cash flow accelerating company.

When doing so utilize cash flow accelerating companies that employ state-of-the-art dialer technologies to assist in getting through to the debtors since statistics show it takes 7 calls to typically get through to a debtor in person.

You will not only find out that it is much less expensive but that just taking calls to accept payment is much less frustrating than making calls in hopes of getting it.

Now that you know more about 1st parties, hopefully you can decide if using one makes sense to accelerate your business’ cash flow!

To inquire about how you can work with a cash flow accelerating company that has 40 years of experience and is now offering cutting-edge dialer technology as part of a 1st party service that was previously only offered to its very large Fortune 500 clients plus how you can do it with 5 contacts over 1 month for a flat @$10 fee per slightly late debtor account,

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #13 "Should Your Business be Using a 1st Party to Help Accelerate Slightly Late Client Payments?"

Speeding up Healthcare Insurance Claim Resolution!

2010-07-14T08:51:00.000-07:00

Secrets Every Creditor Should Know!

2010-05-25T22:48:00.000-07:00

After reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business SHOULD have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

If you have not yet concluded this from Article #1, consider these extremely important secrets that every creditor who is owed money from late past due debtors MUST know!

1) Spending internal company resources to pursue collecting from past due debtors who are more than 60 days late is expensive, creates lost opportunities for resources to work on other things, and impacts cash flow. Internal collection costs more than 10 years ago were shown by the Dartnell Institute to range from $20 to $30 per late past due debtor account. We had prospective clients doubt these costs. However, their own recent studies really surprised them as they came up with internal costs in the $50 to $60 range per late past due debtor account! You might ask, “Where in the world could this much cost be incurred?” Well, one major part of it is comprised of the fully loaded salaries and benefits of the people in the company’s Collection Department times the average amount of time worked on a late past due debtor’s account to try to get payment by sending duplicate invoices, writing and sending letters, and making phone calls. There is also the cost of paper, ink, envelops, and postage to send duplicate invoices and letters. Additionally, there is the cost of telephone charges to make the phone calls. Finally, do not forget the overhead costs for IT, building office space, utilities, etc. While all the internal collection pursuit is going on, the Accounts Receivable Department is taken away from correctly managing invoicing to customers who have not yet passed terms. Last but not least, cash flow is constrained while internal resources, who really wield no power over late past due debtors, are feverishly trying to coerce them with polite requests.

2) Continuing to ask debtors to pay over and over in different ways with internal resources is futile. If a debtor is late past due by 60 to 90 days maximum then ongoing attempts are a waist of time. Just check your company’s own data. Be assured that debtors who have not paid by the 3rd statement (re-invoice and letter) do not pay on the 4th, 5th, or 6th statement! There is nothing more you can do internally to strongly motivate them to pay. Collection agencies and debt recovery companies exist for a reason. Very simply put, they are effective because the debtors know they have the potential to impact their credit. Realize though that a credit impact is never the real goal. The real goal is to get the creditor paid and not simply to “black mark” the debtor. After credit is affected then there is no real inspiration for a debtor to pay so it should only be done as a last resort. This is why so many judgements go unpaid.

3) The expense of the depreciation of debt far out weighs what any collection agency or debt recovery company could charge. After 90 days late past due, the probability of recovery of 100% of the debt begins to depreciate at its fastest rate of ½% per day! By 1 year late past due, only 10% of what is owed by an individual or 29% of what is owed by a company will be recovered. Inotherwords, the cost of depreciation is 90% for a B2C transaction or 71% for a B2B transaction! Even the highest cost percentage collection agency will only charge 50% of what is owed. So see, focus on recovery early as the priority by using a third party versus worrying about what a third party will cost you!

4) There is such a thing as diplomatic collections. Infact, many companies believe they should pursue late past due debts solely in house to insure the clients (debtors) who are desired as long term customers are not offended in the process. So if companies believe their own in house Collection Departments can be diplomatic then why on earth should they believe that a third party can not. Infact, third parties can treat debtors just as diplomatically while wielding the threat of a credit impact subconsciously in the debtors mind simply because they know a third party versus the first party is contacting them! No threats or impolite treatment is necessary. All that is necessary in most cases is for the debtor to simply know that it is a third party who is talking to them. Some debt recovery companies offer unique account-by-account debtor treatment in a diplomatic or intensive way and even send a thank you letter after payment is made in full.

5) Collections is a way to keep customers. Put simply, if a debtor owes your business money and many other suppliers compete with you then it is easiest for a debtor to simply go to your competitor rather than face you to explain why they have not paid. A great analogy is as follows. Assume you rack up a large debt at your dentist and never pay. If you have a bad tooth ache one year later, would you go back to the dentist you owe or go to another dentist? Obviously most late past due patients will avoid the owed dentist like the plague to avoid embarrassment! So see, collecting early but politely from clients you want to retain is actually a way to keep them coming back!

6) The vast majority of money is collected through the mail. Federal FDCPA law dictates that all collection attempts start with letters or written demands. The facts show, and all insiders within the collection industry know this, that 80% of everything that does get collected which is late past due gets collected during the written demand phase! Only 20% needs to go on to phone calls and maybe litigation. Moreover, the lowest cost phase of collections is the mailing/letter/written demand phase. So why pay third parties high percentages for the 80% that are collected via a low cost method?

Now that you know the secrets, hopefully you have concluded from Article #1 and Article #11 that you MUST use a third party early to maximize recovery! If this third party is a profit recovery company you will even better yet minimize the cost of recovery in order to leverage the best alternative to free up those profits which are tied up in late past due accounts receivable!

To inquire about how you can work with a profit recovery company that has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late and how you can do it for a flat @$10 fee per debtor account recovery cost,

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #11 "Secrets Every Creditor Should Know!"

Will Your Business be Able to Get a Bank Loan?

2010-02-25T22:27:00.000-08:00

Psychology of a Delinquent Debtor

2010-02-25T21:18:00.000-08:00

After reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

After having discussed many other topics, it is very appropriate to revisit and re-stress the importance of recovery, which is really where all the money is, via early third party involvement and how this links to the psychology of a delinquent debtor.

Not paying a bill that is owed is really like stealing!

Hence, the following psychology-based observation or analogy can be made:

1) Before most people build up the courage to "steal," they go through a process of increasing tension that builds up to the moment of the act or decision.

2) After that, the anxiety trails off fairly quickly, usually accompanied by some form of internal explanation as to why the decision was right or justified known as rationalization.

The thief’s ambiguity is greatest just around the moment that they execute the behavior of hiding the unpaid for goods in their coat which is the theft (non-payment).

This is a compelling reason to not wait long after the act occurs (failure to pay on the due date) to try and coerce (internal collections attempts) the building up of a self-motivated guilt by reminding them of the inappropriateness of the act which might drive a rescinding of the behavior. This is like a friend saying, “Hey don’t do that! It’s not cool!”

However, the friend is not always with enough influence to alter the behavior. It may take someone of authority like a store employee or security officer (a collection agency or debt/profit recovery company) to say, “Put those goods back now!” to drive a modification of the behavior. In the end it is like a guardian angle sitting on the thief’s shoulder and just after the act occurs whispering in their ear these words, “Do not steal that. It is not correct to do so. Return the goods. There could be terrible repercussions by not doing so. Your reputation (credit rating) could be ruined.” then chances are they will return the stolen goods (pay) before walking out the door (becoming very delinquent).

Isn’t the real priority in the end to get the merchandise returned to the shelf (recovery)? Isn’t this more critical from a non-emotional business standpoint than hoping they are able to walk out the door just so you might be able to apprehend them in order to send them to jail (affect their credit rating) which is emotional versus logical?

Remember, after they walk out the front door of the store (fail to pay before 90 days late) with the stolen merchandise, the farther and farther away from the door they get (older the debt becomes) the less and less likely the store security and police are to catch them to recover the merchandise (collect). This is a direct corollary to the “aging debt decreasing chance of recovery curve”. If the thief gets so far away from the store’s front door that you lose site of them then you probably will never catch them (never recover your money)!

The moral of the story is: “Get a third party involved early and not late to help improve the chance of recovery!”

To inquire about how you can work with a profit recovery company that has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late and where the cost is a flat fee of @$10 per debtor account,

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #9 "The Psychology of a Delinquent Debtor"

How Will Debtors be Phoned?

2010-02-07T01:11:00.000-08:00

After reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

Another critical question that must be asked before selecting which profit recovery company to use is, "Will the phone calls made to my debtors be compliant with the law and handled professionally?"

Everyone has seen the TV reports and newspaper articles about collection thugs harassing people who owe money. Tactics have been documented and shown where collection agencies call the debtor’s employer and bad-mouth the person to ruin their reputation, call at 5 AM in the morning or 12 AM at night to wake up the debtor, and even threaten to physically harm the debtor just to name a few.

These are the exact tasteless tactics that drove enactment of the federal FDCPA law and various other state laws to protect the rights of the debtors and rightfully so!

As discussed Article #4 “Make Sure Your Collection Agency Isolates You from Liabilities Due to Their Errors”, the creditor is liable for the actions of any third party it hires to collect or recovery money for them. Even if the third party has a hold harmless contractual clause legally isolating the creditor from liability, poor third party practices shed a very bad image on the creditor’s business and this negative publicity can affect sales! So there are many reasons you as the creditor want to avoid inappropriate collection practices from your hired third party at all costs.

In studying the debtor complaints filed regularly in the judicial system, it is clear that they almost all happen in what the industry calls the second phase of collections or verbal demands better know as the phone calling phase. The complaints do not originate in the first phase of written demands nor do they happen in the third phase of litigation.

So you want to insure you understand how your collection or recovery company handles phone calls to debtors. Carefully and specifically make sure that they abide by all laws in the phone-calling phase.

This is the minimum set of criteria you should insist on from your collection or recovery company:

     1) third party call center employees are college educated and with more than just a high school degree

     2) third party call center employees are well trained on the federal, state, and local laws

     3) the third party has corporate phone call monitoring (ie. recording) so management can audit call center employees to confirm they are abiding by the law

     4) the third party has corporate fake debtors in the system, unbeknownst to the call center employees, who confirm that correct practices are occurring per the law

In summary, you want a reputable and professional call center process that makes every attempt to conform to the letter of the law!

To inquire about how you can work with a profit recovery company that has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late and where the call center employees are college educated professionals and monitored to insure they comply with the law

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #8 "How Will Debtors be Phoned?"

Should I Pay for Collections Up Front?

2009-12-25T22:26:00.000-08:00

After reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

Another critical question that must be asked before selecting which profit recovery company to use is, "Do I have to pay upfront before I get the money I am owed recovered?"

Some profit recovery companies charge the creditor a flat up front fee per submitted debtor account.
The immediate thought in most creditors' mind is to ponder about why in the world they should pay for a recovery that has not yet happened. The creditor feels they do not want to pay before a recovery occurs since they believe the profit recovery company will work harder if they only get paid when the debt is recovered. Most creditors initially instead want to work on a contingency basis so they only pay after the debt is recovered. This drives some creditors towards working with a standard collection agency that operates on a percentage contingency basis rather than working with the up front flat fee profit recovery company.

The fallacy with this belief is that collection agencies are really NOT paid after the creditor collects the money owed!

Infact, ALL collection agencies, debt recovery companies, and profit recovery companies ARE paid
before you, the creditor, are paid the money that is recovered. It is unfortunate but many creditors fall into the trap of believing that collection agencies working on percentage contingency basis are only paid after the recovery.

You as the creditor must think carefully through the cash flow trail of a collection or recovery as money is recovered from the debtor until the point it actually arrives in your pocket.

So let's take a look at the typical collection agency-to-creditor cash flow assuming the debtor owes $100:
     1) debtor is contacted by the collection agency and is coerced
         into paying
     2) debtor sends the $100 to the collection agency just as
         demanded
     3) collection agency receives the creditor's $100 from the debtor
     4) collection agency takes their 30% to 50% fee or $40
         (assume mean fee)
     5) collection agency holds the remaining $60 owed to the creditor
         for another 30 to 60 days (earning interest on the creditor's
         held money owed and impacting the creditor's cash flow further)
     6) collection agency sends the $60 to the creditor
     7) creditor receives the net back of $60

In summary, who got paid first, you the creditor or the collection agency? Yes, the collection agency did!

Next, let's take a look at the typical profit recovery company-to-creditor cash flow assuming the debtor owes $100:
     1) profit recovery company receives its up front fee of $10
         from the creditor
     2) debtor is contacted by the profit recovery company and is
         coerced into paying
     3) debtor sends the $100 direct to the creditor just as demanded
     4) creditor receives $100 from the debtor for a net back of $90
         after the profit recovery company fee is considered.

In summary, who got paid first, you the creditor or the profit recovery company? Yes, the profit recovery company did!

Now that it is clear collection agencies and profit recovery companies both get paid their fees first before you, the creditor, get your money, if you are assured both will recover the money owed from the debtor then which would you prefer to hire? Would you want to get $60 net back or $90 net back? Few creditors would choose the $60! So, yes, the profit recovery company is the better choice when recovery performance from both is assumed equal. If you choose a profit recovery company with a top industry recovery rate then there is no question that it is the best business decision based upon the financials.
So do not ponder over not paying up front for a recovery since all collections are paid for up front. Instead, ponder over recovery rate and net back!

To inquire about how you can work with a profit recovery company that has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late and where the debtors pay you what is recovered directly while you only pay the profit recovery company an up front flat fee of @$10 per late past due account

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #7 "Should I Pay for Collections Up Front?"

Require Third Party Flexibility on How It Handles Debtors

2009-12-19T23:31:00.000-08:00

Use a Third Party Before Year's End

2009-11-30T23:23:00.000-08:00

After Reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

At the end of the year it is even more important to leverage this assistance for more than just the recovery.

Even with the best profit recovery company, getting more than 50% after 90 days of aging via written demands is an excellent recovery! For verbal demands to bring in another 20% after 130 days of aging would also be excellent! What this means is that the other 30% best case goes unrecovered! Businesses typically have no choice but to write this debt off.

What "writing it off" really means is to take a positive tax situation for it with the US federal government's IRS department. However, if your write-off is higher than it has been on average in past years then an audit trigger is likely to be set. In the current economy, a higher write-off than normal is likely. The IRS will in an audit situation want justification that the write-off is valid versus being an illegal transfer of money to someone else or you "under-the-table". They will also want to know that it truly was unrecoverable.

Only an unbiased third party collection agency or debt/profit recovery company can offer irrefutable evidence that the write-off was valid and truly pursued yet unrecoverable.

The other thing most creditors must realize is that the debtors that put you in a write-off situation are really no better than a common criminal and infact are maybe even worse. Here is an example (relating to product vs. service) demonstrating why. A typical criminal sneaks in the back door of your business and takes product. A debtor, on the other hand, smiles as they walk in your front door and have you load good product onto a truck on your dock while you incur the cost of shipping to drop it on their doorstep yet they never pay you! You have to ask which is worse!

A key piece of final advice to consider at years end, following an unsuccessful third party collection/recovery attempt and subsequent write-off, is to send the debtor and the IRS a 1099 equaling the price of goods or service delivered. Basically, since they did not pay you, you have paid them income in the form of free un-paid-for product or service. Talk to your lawyer to get specific legal advice relating to doing this before proceeding. This will atleast give you some satisfaction to know that they will have to "pay the piper" taxes on this "stolen" good or service!

To inquire about how you can benefit from a flat fee of @$10 per late past due account via a profit recovery service which has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late,

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #YE "Use a Third Party Before Year's End"

Demand Good Communication from Your Collection Agency

2009-11-27T23:03:00.000-08:00

After reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

Another critical question that must be asked before selecting which profit recovery company to use is, "How excellent is its communication capability?"

The level of communication excellence should be determined based upon:
     1) its ability to work bi-directionally
     2) its technology
     3) its accessibility
     4) its flexibility

On point 1), insure the profit recovery company has the ability not only to accept submitted debtor information from the creditor but just as importantly has the ability to supply needed debtor pursuit status back to the creditor. This debtor pursuit status should include information such as whether the debtor is in bankruptcy, if the debtor address is good or if it has changed, what the recovery phase (written, verbal, or litigation) and step (how many letters have been sent or calls have been made) is, if the debtor has contested the recovery, if the debtor has made partial payment, etc.

On point 2), insist that the profit recovery company have an internet based primary creditor interface for debtor information submission and debtor status monitoring. It is fine if a secondary option exists in a paper or phone format if you are one of those few creditors that do not have internet capability. However, if you do not have internet access as a creditor, it is highly recommended you do so to reap the great benefits. If you are not comfortable with the internet, hire someone full-time or part-time to assist.

On point 3), demand that you as a creditor have the ability to submit debtor information and to request debtor status from the profit recovery company 24 hours per day and 7 days per week. It should be noted that one of the biggest complaints heard from creditors about their collection agencies is that they call their agency and have to leave a message inquiring about a debtor's status and no one ever gets back to them! This really goes hand-in-hand with point 2) since an internet interface is always available per the schedule of you the creditor. An internet creditor interface eliminates the need for information to be "pushed" from the collection agency to you since it is simply "pulled" from the profit recovery company whenever you want it.

On point 4), confirm that debtor information can be submitted to the profit recovery company on a single debtor basis via manual entry or on a multiple debtor basis via a batch file. Also confirm that batch files can be submitted in a variety of formats (ie. Excel, Access, ASCII, Comma De-limited, etc.) so it is compatible with your creditor's business accounting software or ERP system. Make sure that you the creditor can also flexibly select the format in which the debtors are contacted in writing based upon the debt specifics (unpaid invoice, bounced check, un-returned equipment, etc.). Check if there is flexibility in the manner in which the debtors are contacted so that it can be done diplomatically if you the creditor want to retain the debtor as a customer or intensively if you never care to do business with the debtor again.

So as you can see, you as a creditor must select a profit recovery company that has the ability to communicate with you in a bi-directional, high technology, accessible, and flexible fashion.

To inquire about how you can work with a profit recovery company that has high technology 24 hour 7 day a week accessible client internet based interface for debtor upload and recovery status that has a flat fee of @$10 per late past due account and an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late,

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #5 "Demand Good Communication from Your Collection Agency"

Get Paid What You Are Owed Now or Plan on Getting Paid Later

2009-11-23T12:27:00.000-08:00

After reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

Another critical decision that must be made now is when to hire the third party!

Well an important fact to know is that the majority of what will get recovered will occur within less than 2 months after starting the third party effort.

So the first question you need to ask yourself this time of year (especially if your debtors are consumers - B2C) is, "Do you realize that the holidays are almost here?"

Wouldn't you agree that the holidays are an expensive time for businesses and individuals? There are typically special business lunches/dinners, parties, bonuses, raffles, greeting cards, gift certificates, etc. Individuals typically buy presents, cook meals, travel, etc.

What expenses do you think will take priority during the holidays if there is a limited budget? The priority will inevitably be business expenses to build employee morale and personal expenses for the family. Paying externally focused debts over internally focused expenses will not be the priority! Even worse, those internally focused expenses may be covered via credit cards resulting in an accumulation of even further debt.

So if your business does not get paid for the money it is owed now before the start of the holidays, these clients will probably spend the money they owe you on their holiday priorities versus paying you!

Get the third party profit recovery company hired by mid October to allow sufficient time to obtain the money owed before Thanksgiving and Black Friday (which is the biggest shopping day of the year). Otherwise do not count on a high likelihood of getting paid before the end of January after credit card bills are paid.

Finance your holiday and not theirs!

Now the second question you need to ask yourself this time of year (especially if your debtors are businesses - B2B) is, "Do you realize that most businesses close their financial books at year's end and base bonuses on it?"

Wouldn't you agree that business executives drive very hard at the end of the year to exceed objectives and financial targets to get the largest bonus possible?

Are you aware that in addition to financial targets relating to revenue/sales and profitability, most businesses have a financial target relating to cash flow? Do you know that cash flow is increased by not only getting customer payments in early plus reducing capital expenditure and inventory but also by paying suppliers as late as possible?

If they know you are "flexible on your terms" and they can take advantage of you by paying late, do you think they would delay paying until after December 31st if at all possible knowing that it would improve their cash flow in comparison to their target and increase their bonus?

So if your business does not get paid for the money it is owed now before the holidays at the end of November, these clients will probably delay paying you the money they owe you to help "lock-in" their bonus.

Get the third party profit recovery company hired by mid October to allow sufficient time to obtain the money owed before Thanksgiving. Otherwise do not count on a high likelihood of getting paid until January.

Finance your bonus and not theirs!

To inquire about how you can get your money before the holidays and benefit from a flat fee of @$10 per late past due account via a profit recovery service which has an average recovery rate of 56% in 40 days for accounts turned over before they exceed 90 days late,

call us at:

818-710-0244

Series: "Recover Your Business Profits"
Article: #H "Get Paid What You Are Owed Now or Plan on Getting Paid Later"

Make Sure Your Collection Agency Isolates You from Liabilities Due to Their Errors

2009-10-27T00:34:00.000-07:00

After reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party profit recovery company to free up those profits which are tied up in late past due accounts receivable.

However, another critical decision that needs to be considered when choosing which third party profit recovery company to hire is whether it has a creditor hold-harmless contractual clause to protect and isolate you, the creditor, from liability resulting from their actions coupled with an umbrella insurance policy against any third party violations of law!

The first key criteria that must be used in order to make the decision is whether the third party has a "hold-harmless" clause in its contract with you, the creditor. This is very important to minimize your risk as a creditor since in many cases the hirer of the third party is liable for illegal collection practices by the hired agency or company per the federal FDCPA (Fair Debt and Collections Practice Act).

The profit recovery company should be able to point out the exact clause on the contract where they are isolating you from any legal mistakes their employees might make in complying with federal, state, or local laws. While there are many reputable third party collection agencies, debt recovery companies, and profit recovery companies who make every attempt to follow the "letter of the law," there are some which are not compliant. Even the best in the industry might have only one employee who fails to follow procedure even if as an isolated event. The most likely phase in the collection or recovery process to have this risk is in the verbal demand phase when phone calls are being made from the third party to the debtor. This is why a contractual "hold harmless" clause is a must!

The second key criteria that must be used in order to make the decision is whether the third party is insured. Once again, this is very important to minimize your risk as a creditor since in many cases the hirer of the third party is liable for illegal collection practices by the hired agency or company per the federal FDCPA (Fair Debt and Collections Practice Act).

The profit recovery company should be able to display to you a valid in-force policy for an umbrella insurance coverage with a face value of at least US$1,000,000 dollars per incident and US$20,000,000 dollars cumulative. This protects you from an attempted lawsuit if the debtor sues the third party, even if they have a "hold-harmless" clause, and they can not pay due to a lack of funds.

Make sure you, the creditor, are contractually and financially isolated from liability from unlawful third party practices!

To inquire about how you can minimize your risk with a profit recovery company that has a hold-harmless contractual clause and a multi-million dollar umbrella insurance, while at the same time benefiting from the flat @$10 fee profit recovery service that has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late,

call us at

818-710-0244.

Series: "Recover Your Business Profits"
Article: #4 "Make Sure Your Collection Agency Isolates You from Liabilities Due to Their Errors"

Make Sure Your Collection Agency Follows Federal and State Laws or You Could do Time and be Fined

2009-10-21T20:22:00.000-07:00

After Reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

However, a critical decision that needs to be considered when choosing which third party profit recovery company to hire is its licensing and where its offices are located!

The first key criteria that must be used in order to make the decision is whether the third party is licensed (not necessarily located) in the state where the debtor resides. Federal law states that a collection, debt recovery, or profit recovery agency or company can not collect out of state by mail or phone in a state unless they are licensed in that state. So the simplest way to avoid having an issue where your third party can not collect from your debtor because they are not licensed in the state the debtor resides in or, worse yet, where your third party breaks the law is to insure they are licensed in all states. This is very important to minimize your risk as a creditor since the hirer of the third party is liable for illegal collection practices by unlicensed agencies and is subject to a $10,000 fine or up to 5 years imprisonment per section 897(c) of the federal FDCPA (Fair Debt and Collections Practice Act).

The second key criteria that must be used in order to make the decision is whether the third party physically has an office located in restricted/closed or partially closed states if the debtor resides there. At the time of the writing of this article, 18 states were closed and 8 were partially closed. Each state law is unique but the closed and partially closed states basically require that a collection, debt recovery, or profit recovery agency or company can not collect in their state by mail or phone unless they are located (with an office but not headquartered) in that state. So the simplest way to avoid having an issue where your third party can not collect from your debtor because they do not have an office located in that closed or partially closed state that the debtor resides in or, worse yet, where your third party breaks the law is to insure they are located in all closed and partially closed states. Again this is very important to minimize your risk as a creditor since the hirer of the third party based upon the state may be liable for illegal collection practices by non-local agencies and may be subject to fines and/or imprisonment.

Make sure you the creditor do not do time or pay the fine for internal unlawful practices or an unlawful third party!

To inquire about how you can minimize your risk by using a profit recovery company which is licensed in every state and which has offices in all states where it is required, while at the same time benefiting from the flat @$10 fee service that has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late,

call us at

818-710-0244

Series: "Recover Your Business Profits"
Article: #3 "Make Sure Your Collection Agency Follows Federal and State Laws or You Could do Time and be Fined"

"Cost of Collection or Recovery Rate Itself, Which is More Important?" That is the Question!

2009-10-19T18:33:00.000-07:00

After reading Article #1 titled "Is Your Business Owed Money?" in my series of "Recover Your Business Profits" blog posts, your business should have concluded to use a third party which is a profit recovery company to free up those profits which are tied up in late past due accounts receivable.

However, another extremely critical decision that needs to be considered when choosing which third party profit recovery company to hire is what that third party's recovery rate is!

The fact of the matter is that the largest account receivable losses a creditor will incur has nothing to do with the cost of collection loss against them but rather the loss due to what is not recovered at all.

This is why a third party needs to be hired by creditors no matter what in order to increase the likelihood of recovery and the creditors must remember "the earlier the better"!

Obviously, a creditor wants to pay the least amount possible for the collection and that is why a profit recovery company is better than the other alternatives. However, if that third party's recovery rate record is not substantiated with facts and is not good compared to the industry, whether a profit recovery company or not, then you should look for another third party! Ask to see reports from the third party substantiating results and ask for client recommendation letters supporting this. Ask how that third party compares to the average based upon the American Collectors Association (ACA) statistics. Look to see what reputable magazines and journals like Fortune, Investor's Daily, and Barron's say.

Recognize though that recovery rate is also affected by things outside the control of the third party and here are the 3 most important outside effects:

1) Age of the debt (most important)

2) Consumer or business debtor type (consumers are more difficult to collect from than businesses)

3) Industry or market sector of the debt which really reflects the classification of debtor (for instance if a creditor is from the bail bondsman sector their debtors are criminals and are much more difficult to collect from than if the creditor is from a court reporter sector where their debtors are lawyers and are much more simple to collect from).

So when a third party's recovery rate is looked at, these above points need to be considered.

When looking at reports, look for ones that are similar to your situation and preferably in the same industry or market sector.

When looking at ACA statistics, look for the third party's overall total recovery rate for the previous year across all debtor types and classifications and within a similar aging range (ie. less than 90 days and/or less than 1 year) but it should probably not include debts greater than 1 year old since the number of old accounts included can unfairly taint the statistics and since age is a more significant effect than effectiveness.

Another important thing to remember is that all recovery or collection efforts transition through 3 basic phases as governed by federal law. Written demands (phase 1) must be issued in writing first to the debtor followed by verbal demands (phase 2) where phone calls are made to the debtor and ultimately litigation (phase 3) by taking the debtor to court. It is important to note that the facts show that the greatest percentage (@80%) of debts which will get recovered get recovered in the first phase! So understanding the recovery statistics of a third party relating specifically to this first phase for debt less than 1 year old versus the ACA norm is of the utmost importance. Average phase 1 recovery rates of greater than 40% for debts with aging less than 1 year would be considered very good. Next, understanding the recovery statistics of the third party relating to the second phase for debts less than 3 years old versus the ACA norm should be investigated. Average phase 2 recovery rates of greater than 20% for debts with aging less than 3 years would be considered very good.

To inquire about how you can increase your recovery rate by using a profit recovery company which Fortune Magazine says "... has a collection rate well over 50%" while at the same time benefiting from the flat @$10 fee per late past due account,

call us at

818-710-0244.

Series: "Recover Your Business Profits"
Article: #2 ""Cost of Collection or Recovery Rate Itself, Which is More Important?" That is the Question!"

Is Your Business Owed Money?

2009-10-17T20:48:00.000-07:00

Your business, like most, does great work and you should not feel guilty about expecting to get paid promptly on-time per the agreed upon terms!

Unfortunately, the facts show that for every 100 clients billed at least 3% go late past due and depending on the market sector the percentage may be much higher. To complicate the matter, in the current economic situation, these percentages have been rising.

Now your business is inevitably spending time and resources on trying to get those clients who are late and have not paid to pay. The problem is though that many Accounts Receivable departments spend far too much time internally trying to get those late past due clients to pay.

Numerous expert recommendations have been quoted in newspapers like the Wall Street Journal as well as in magazines like the LA Business Journal stating that after 90 days internal collections should be turned over to an external third party for assistance with the collection. The facts are clear, if a late past due client (debtor) has not paid after 3 months of encouragement from the business (creditor) who has sent extra invoices, letters, and probably made phone calls then they probably will not react to additional efforts. This is why banks foreclose on late mortgages after 3 months of missed payments (ie. 90 days).

Even more important is the fact that, per the U.S. Department of Commerce, a debt which is late starts to rapidly reduce in its probability of being recovered just after 90 days. Just after 90 days, it reduces at its highest rate of 1/2% per day being lost.

What is needed is the involvement of a third party after 90 days to contact the client debtor on behalf of the business creditor. The fact that a third party has the ability to affect the client's credit wields a great wealth of power.

Surprisingly, far too often a third party is not hired by the business though! The two most common reasons given are:

We have a great A/R group and will handle it ourselves!
I do not want to offend my client since I want to retain the client!

As previously mentioned, point 1 has nothing to do with how good a business' internal A/R department is but rather everything to do with their inability to have a real impact on the debtor's credit rating in order to force a debtor to pay if they have not after 90 days of trying. Remember what the experts said! So point 1 really must be discarded as a valid justification for not hiring a third party.

Relating to point 2, if a client really must be retained then there are ways that a good third party can diplomatically handle the payment pursuit so as to not offend. Even more important is how the business itself responds to the client if and when they call to ask why they have been placed into "collections". The most appropriate way to respond to an irate or concerned key client who is a debtor is simply to say that the billing and collections efforts have been out-sourced, that you were unaware that they were so late in paying, and that if they simply expediently pay you will insure the collections pursuit is terminated. Getting paid on-time even by some of your biggest clients is very critical for your business viability. Do not confuse the fact that a client is large with the fact that they will inevitably eventually pay. How many suppliers do you think considered General Motors or Chrysler as key large customers who they did not want to offend? These same businesses (suppliers) probably tolerated outstanding late payments and did not involve third parties early enough to beat the declaration of bankruptcy which left those businesses "holding the bag" of most the debt at pennies on the dollar! So point 2 also must really be discarded as a valid justification for not hiring a third party as well.

Now that you see that a third party must really be hired to help get late past due accounts receivable collected, the question that must be asked is, "What is the right third party to use?" Well here are the options:

     a) Handle it internally by taking it to small claims court if the
         debt is small enough
     b) Handle it internally by placing a lien on the client's property
          if applicable
     c) Hire a lawyer to pursue the debt if the debt is large enough
     d) Hire a collections agency
     e) Hire a profit recovery company

Option a) typically requires allot of internal time to be spent filling in court forms, pulling together backup facts, and attending at least a half day at court. A court fee is also required. With an internal labor cost estimate of a conservative $10/hr., it is quite reasonable to expect at least $200 in cost to be incurred for the paperwork preparation, time in court, and court fee.

Option b) typically requires time to be spent filling in government forms, pulling together backup facts, and spending time at a government office. A government fee is also required. With an internal labor cost estimate again of a conservative $10/hr., it is quite reasonable to expect at least $100 in cost to be incurred for the paperwork preparation, time at the government office, and government fee. Even more important is the fact that no money will be recovered until the property with the lien is actually sold. If there is no sale then there is no money collected and years and years can go by before a sale ever happens.

Option c) will run at least $100/hr. for the most novice of lawyers and can run over $400/hr. for a seasoned expert lawyer. As you might imagine, it would not be uncommon for a lawyer to spend several hours on the simplest of collections resulting in a bare minimum of $200 for the novice lawyer. It would be much more typical though for >30% of the debt to be consumed in lawyer costs and for an upfront retainer to be requested. You also must remember there are internal costs incurred again to pull together backup facts for the lawyer.

Options d) will typically cost 20% to 50% of the amount of the debt whether the debt is collected in the written demand, verbal demand, or litigation phases. This means no profit is left in the collection since very few businesses make in excess of 20% profit!

Option e) will cost a low flat fee of @$10 per late account. On debts over $100, it is highly likely that some profit will be retained after the recovery!

To inquire about how you can benefit from a flat fee of @$10 per late past due account via a profit recovery service which has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late,

call us at:

818-710-0244 .

Series: "Recover Your Business Profits"
Article: #1 "Is Your Business Owed Money?"

Would You Like Tips to Help Improve Your Internal Collection Effort Results Prior to Involving a Third Party?

2009-10-15T12:20:00.000-07:00

To inquire about how you can benefit from a flat fee of @$10 per late past due account via a profit recovery service which has an average 56% recovery rate in 40 days for accounts turned over before they exceed 90 days late,

call us at:

818-710-0244 .

Series: "Recover Your Business Profits"
Article: #0 "Would You Like Tips to Help Improve Your Internal Collections?"