At what point should the services of a debt collector be engaged. Many factors impact on this decision:

  • What is the size of your business
  • What is the nature of your business
  • Do you deal in goods or services or both goods and services
  • Do you supply business to business or business to consumer
  • Do you have a large number of small debts or a small number of large debts

The decision of when to use a debt collector is always going to be specific to the industry concerned and the customer(s) involved but one statement is true for all outstanding debts :

The longer a debt remains unpaid, the harder it will be to collect it.

It may be that outside of your normal collection process, you have the time to contact the debtor, to negotiate a settlement, to monitor the progress of the debt, to establish and manage payment arrangements and to follow up when agreements are not met but such processes are time consuming and take staff away from the important work that they should be attending to. These are all functions that a professional debt collection service will perform for you all covered under the fee you have negotiated based on a successful recovery of the outstanding debt.

As long as the account remains uncollected in your receivables it is not adding any value to your business. The longer it remains in your Accounts Receivables the harder it will be for you to collect it. Once an account reaches 90 days, in the absence of any specific agreement with the customer your best chance of receiving your money in some timely manner is to engage a debt collector to follow up. Nobody remains in business for several months by paying none of their bills, some are being paid and you want to ensure that yours is amongst the ones being paid. Engaging a debt collection service will show that you are serious about collecting your funds and it sends a signal to the debtor that they must communicate in relation to the debt and make an effort to reduce it.