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The Truth About Collections

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”.
 
Collection Prevention
 
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 listconsider using it to create the system I mention in #10.  

Collection Prevention Check List

  1.  Ask for a Purchase Order – some companies won’t pay without one
  2. Send your Invoicing on Time!
  3. Invoice correctly – make sure the invoice matches the PO
  4. Send statements monthly
  5. Use collection letters with multiple media, email, snail mail and fax
  6. Use the phone! Collection Calls work – small balances too
  7. Attend to your disputes and resolve them quickly
  8. Use a CRM and document everything
  9. Review your aging regularly
  10. Create and use a system

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