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.
A critical question that must be asked if your business is not using any third party to help with collection is, "Will your business be able to get a bank loan?"
The facts speak loudly that if only internal collection efforts occur, whether the business clients are B2B or B2C, inevitable late past due accounts receivable will occur and drive extended days sales outstanding (DSO) resulting in required standard accounting procedure write-offs.
As tax time arrives, the IRS may question and even audit a business to make sure that write-offs are truly above board and justified. The IRS will want to insure that goods or services were not supplied to friends and/or family for free and for personal gain while the business writes them off and avoids paying taxes on the income. Issuing 1099’s to delinquent debtors helps avoid ethical inquiry from the IRS (and forces debtor tax payment on the “charitable” income) but so does having a third party profit recovery company on contract with evidence of a valid documented attempt to collect from each written off debtor.
Even though the chances of an IRS audit can be virtually squelched with the above approaches, write-offs after this can still have great negative impact on the business! Why? Because of what banks call a “non-performing asset” otherwise known as “written-off A/R or DSO”!
You may ask, “So what if I have a uncollected debt which is written off as a non-performing asset? Well, in this economy with extremely tightened credit being offered from banks to businesses, you definitely do not want to have an inability to get credit to expand the business or to cover cash flow fluctuations. It could be the difference between flourishing and going bankrupt.
The fact of the matter is that banks look closely at non-performing assets (debt write-offs) as a key criteria to determine whether a loan will be granted or not.
Do not strap your business for cash by not taking full advantage of a profit recovery company to avoid or minimize unpaid client A/R based write-offs!
To inquire about how you can keep your business financial standing high enough to acquire needed bank loans by working 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 doing so for a flat @$10 fee per debtor account,
call us at:
818-710-0244
Series: "Recover Your Business Profits"
Article: #10 "Will Your Business be Able to Get a Bank Loan?"
Thursday, February 25, 2010
Psychology of a Delinquent Debtor
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"
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"
Sunday, February 7, 2010
How Will Debtors be Phoned?
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?"
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?"
Subscribe to:
Posts (Atom)
