Collection agency letters outperform in-house collection letters by a factor of 3 to 1.
If you’re skeptical like my little buddy in the picture above, I get it. My company sells collection letters, why wouldn’t I say they work better? There’s a good reason, you won’t want to work with me if I lie – and I want you to work with me. So I tell the truth – so you’ll like me and trust me and want to do business with me. So here’s the deal:
If you have an effective in house collection process in place (you have read and implemented my ‘Step-by-Step Plan for Effective In-House Collections without Losing Customers’ right?) your need for collection letters of any kind should be minimal. However, virtually every business large or small will have slow paying or non paying customers eventually.
Once you’ve executed all of your in-house efforts and sent at most two in-house collection letters, if your customer hasn’t responded, and by responded I mean sent a payment, it’s time to try something else. Note, giving them “One more chance” to respond doesn’t qualify as trying something else!
Try pre-paid collection agency letters instead. It used to be, if you couldn’t collect or couldn’t collect fast enough, your only option was to turn you unpaid invoices over to a collection agency for a 25% to 50% commission. That’s no longer the case, now there are several companies including mine, that will send a series of third party letters for you with no commission at all. This is a resource, it’s inexpensive and it works, use it!