As the owner of a business, you probably know that data indicates that debt grows more arduous to recover with time. The longer you wait to hire a collection agency, the lower the chances of a successful recovery. For example, you don’t want your customer to declare bankruptcy while they still owe you money.
Yet, no business owner wants to involve a collection agency until they’re sure the debtor won’t pay, especially because they value their reputation and relationships. That’s why it’s a good idea to hire a commercial collection agency that promises to do things differently by taking a diplomatic approach to debt collection.
Here are some signs that you need a business-to-business collection agency:
1. They’ve Been Fussy from the Start
Unfortunately, many customers are nitpicky from the start of a project because they want to negotiate the price down later or not pay at all. If your client has been unreasonably fussy and can’t be satisfied regardless of your efforts, then you may need the help of a debt collection agency down the road.
2. They Did Not Pass A Background Check
It’s a good idea to conduct a background check on any business you extend credit to. Check their references, credit report, etc., to learn if they’re going to be a reliable customer. If they did not pass a background check, ask for a deposit. A customer that didn’t pass a background check and refused to pay a deposit may cause problems later.
3. They’re Ignoring You
It’s good practice to automatically send an invoice when payment is due and send a reminder a few days later. You can follow up with an email and a phone call to their finance department to politely inquire about the unpaid invoice. When a customer starts ignoring you, then they may have no intention to pay their dues.
4. Their Turnover is High
If you learn that your customer’s employees are resigning or getting fired with alarming frequency, then act fast. A company that can’t pay salaries on time usually starts firing its staff when it fails to qualify for a bridge loan. Likewise, employees that regularly get paid late due to cash flow issues start looking for work at other places.
5. They Owe Other Businesses Money
It’s a good idea to pay attention to a company’s reputation in the world of business. If your late-paying customer also owes multiple other businesses’ payments, then take it as a red flag. It’s a good idea to immediately get in touch with a debt collection agency with legal resources. If the business is close to insolvency, you don’t want to be beaten to the punch by other creditors, leaving you with nothing to recover.
6. Their Stock Is Dropping
A publicly-traded company isn’t healthy if its stock is freefalling. When investors lose confidence, you need to reach out to a collection agency for help.
If you need help recovering debt, partner with an agency that takes a humane approach to the collection process and promises to preserve your reputation and essential business relationships.