Magazine article Black Enterprise

The Bill Collector Cometh: Do You Need a Collection Agency to Gather Receivables?

Magazine article Black Enterprise

The Bill Collector Cometh: Do You Need a Collection Agency to Gather Receivables?

Article excerpt

Generating revenues is the lifeblood of any business. But far too often small businesses are so focused on making money that they neglect to put enough effort into actually collecting it. According to the International Association of Commercial Collectors Inc. (IACC) in Minneapolis, billions of dollars in delinquent commercial credit are on the books of businesses worldwide.

Collection is a thorny issue because it can require getting tough with the very same customers that keep your business afloat. Many small businesses handle the entire process in house, either by charging their sales staff with the task of collecting on their accounts, or by using dedicated collections personnel.

However, for reasons of convenience or the need to remain "the good guy" in the eyes of treasured clients, many companies outsource some or all of their collections functions to a professional agency. Most collection agencies try to collect money by using a combination of letters and telephone calls. Some will also help their clients pursue legal solutions to collecting a receivable.

According to a recent survey by the American Collectors Association Inc., there's a 33% chance that a collection agency will recover your money. The average account turned over to an agency has a balance of $1,614 and is 191 days past due; the average agency commission is 39%.

These figures indicate that turning over an overdue account to a collection agency is an action of last resort for many companies. …

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