The Truth About Collections
Ben Franklin first said it in 1735 almost 300 years ago – and it’s as true today as it was then.
“An Ounce of Prevention is Worth a Pound of Cure”
The average collection agency has about an 11% recovery rate, the good ones about 30%, that means 70% of the accounts turned over for collections are never recovered. Post judgment collection are no better, 75% to 80% of all court judgments go uncollected. For more on this download our Free Report “Small Claims Big Mistakes”.
Consumers – we recently got a call from an unfortunate consumer selling an appliance online for $400 – one of his prospective purchasers offered to buy with a check – but he needed some cash and asked our unhappy seller if he could give him one for $1000 get $600 cash back ….
I know what you’re thinking, “I’d never fall for that” – but you might – when face to face with a charming thief we often feel compelled to trust – we hate to say NO – check yourself – carry around an index card for a day, every time you say yes when you want to say no make a check mark – if you have more than 3 at the end of the day, you are at risk.
Business to Business – there’s plenty to say about preventing collections in a B2B scenario. In fact, I wrote over 700 words about it, assuming you won’t read 700 words I created a check list, consider using it to create the system I mention in #10.
Collection Prevention Check List
- Ask for a Purchase Order – some companies won’t pay without one
- Send your Invoicing on Time!
- Invoice correctly – make sure the invoice matches the PO
- Send statements monthly
- Use collection letters with multiple media, email, snail mail and fax
- Use the phone! Collection Calls work – small balances too
- Attend to your disputes and resolve them quickly
- Use a CRM and document everything
- Review your aging regularly
- Create and use a system