Several Months ago I conducted a training for one of the finest trade associations associated with the finance industry. The purpose of my training was to educate about 50 finance companies about the topic of external collections. Meaning how and when should a business use external collection firms to collect on receivables that the company cannot collect on their own.
As part of the training the association asked participants to provide feedback on how they thought the speakers performed. The training was very well received by all attendees. One attendee provided some feedback in the comment section that indicated they felt the presentation was too focused on selling the need for outside collection firms. As we are an outside collection firm the implication was we were more concerned about selling the need to use outside collection firms as opposed to educating the attendees. Although this was only one comment out of about 50 attendees, the comment was actually painful to receive and made me think about our perceived focus as a third party collection firm.
The comment made me realize that maybe I need to be more clear about the role of third party collectors because our goal is not to sell third party collection services. Rather our goal is to make sure accounts are sent to third party firms at the right time to maximize collection efforts.
So with that said let me reiterate our position on third party collection firms vs. internal collection efforts. Our philosophy always will be and has always been that any company in any industry should exhaust any and all internal collection efforts before sending any file to a third party firm. This includes making sure internal collectors are experienced, professional, diligent and have the proper skill sets to be an internal collector. Before sending any file to any third party collection firm, internal collectors should use every technique available to them to collect which includes telephone calls, emails, faxes and certified letters, etc.
Our position as a third party collection firm is that only after ALL internal collection efforts has stalled should a file be sent to a third party firm. The biggest question I am asked by clients and prospects is how does one know when internal collection efforts has stalled. In a nut shell, internal collection efforts have staled when:
- Debtors stop communicating.
- Debtors stop returning call and emails.
- Debtors do not make firm promises regarding how they are going to pay back what is due either in a lump sum, as a settled amount or as part of a payment plan.
If any of the above takes place the file should be sent to a third party collection firm REGARDLESS of the receivable aging.
Collection Tip: A company should only send a collection file to a third party firm after all internal collection efforts have stalled. However when internal collection efforts stall the file should be sent to a third part collection firm immediately because time is of the essence when it comes to commercial collections because business are here today and for one reason or another closed, shut down or gone tomorrowif too much time goes by without a positive collection result.