Shoppers Still Stick to Payday Purchases

Read the headline of an article in the Wall Street Journal 8-30-10 by Anjali Cordeiro. In summary, the very good article deals with the pattern of people timing their purchases to paydays and government payouts such as Social Security, in other words, they are living paycheck to paycheck.
What does this mean for your business whether you sell consumer goods or services or have a medical practice? The most immediate impact should be on your accounts receivable and timing your invoicing and phone calls. You want those calls and bills to coincide with paydays and payouts. These most common paydays and payouts are:

1st of the month
Friday's
3rd of the month (Social Security)
15th of the month
MAJOR PAYDAYS would be Fridays that fall on the 1st and 15th

Contrary to popular opinion, 1st class mail is pretty efficient, we find that we get and our letters are received next day mail within Texas and 2nd day delivery within the rest of the US. So, when you give deadlines for payment, use the calendar and tack on a day or two after a payday. When you make collection calls, you'll have better luck if you spend your time a couple of days prior to and on actual paydays. Mailing your invoices or collection letters so that the customer or client receives it a couple of days prior to payday will yield better results. If you use a collection agency, make your placements between paydays.

For those of you that try this or may currently use this payday timing, I'd love to hear how it works for you.

Bad credit is bad news for job seekers

With unemployment at record highs in some parts of the country and higher than normal at best in others, job seekers are finding that their credit rating can make or break their job search.

An article in the Wall Street Journal by Kristen McNamara covers the topic and she writes "Concerned about rising rates of employee theft and fuduciary issues, more employers are conducting background checks on applicants for some positions. Companies say the information can offer insight into a candidate's level of responsibility. "

And why not? With a deluge of applicants for open positions, it makes sense to not only hire the best candidate and one with good credit over one equally qualified with spotty or poor credit.

Not all collection agencies report to the credit reporting agencies. If your company uses a collection agency to collect your bad debt, make sure that agency reports your accounts to the credit reporting agencies so that it affects your customers or patients credit adversely. Depending upon the agency, the accounts don't go on the credit report immediately because the agency uses the reporting tool as a "carrot", your customer or patient can pay the debt BEFORE it lands on their report thereby helping to protect their credit.

Here at JP&C, we get payments for our clients on past due accounts that are as much as six years old because the consumer needs to clean up their credit for employment, insurance and loan application reasons to name a few.

Federal Trade Commission 2009 Top Consumer Complaints

The FTC has released the 2009 top consumer complaints list and debt collection agencies came in second, usually it is the number one complaint. This year, number one was identity theft. In reviewing the individual states complaints list, "internet providers" consistently came in first or second. I have also included the link to the FTC report if you have a few minutes to read about consumer behavior, remember, these folks took the time to actually make a report.

Rank Category No. of Complaints Percentages
1 Identity Theft 278,078 21%
2 Third Party and Creditor Debt Collection 119,549 9%
3 Internet Services 83,067 6%
4 Shop-at-Home and Catalog Sales 74,581 6%
5 Foreign Money Offers and Counterfeit Check Scams 61,736 5%
6 Internet Auction 57,821 4%
7 Credit Cards 45,203 3%
8 Prizes, Sweepstakes and Lotteries 41,763 3%
9 Advance-Fee Loans and Credit Protection/Repair 41,448 3%
10 Banks and Lenders 32,443 2%
11 Credit Bureaus, Information Furnishers and Report Users 31,629 2%
12 Television and Electronic Media 26,568 2%
13 Health Care 25,414 2%
14 Business Opportunities, Employment Agencies and Work-at-Home Plans 22,896 2%
15 Computer Equipment and Software 22,621 2%
A complete list of complaints can be found at: http://bit.ly/cBRiLT

Famous people get turned over for collections too!

I've been in the collections business since 1989 and over the years have seen well known and famous actors, radio personalities, newspaper columnists, politicians & business people placed for collection for a past due bill. Because of legal and privacy reasons, I am unable to disclose any names but would not anyway for ethical reasons. These people are not deadbeats any more than the average consumer is a dead beat.
Only a small percentage of people placed for collections incur debt without intending to pay it back. Most of the bills are unpaid due to a dispute with the bill or because of personal circumstances such as job loss or divorce.
The vast majority of the famous and well known could not have been nicer, pleasant and professional in their conversations about the debt. I can only recall one actor who was very vulgar and unpleasant.
Every day is an interesting day at a collection agency.

An excellent credit and collections manual for small business

I received a copy of Michelle Dunn's "Ultimate Credit and Collections Handbook" in the mail today. Michelle is a nationally recognized authority and resource in the credit and collections industry.

The book starts from the beginning with "What is debt" ending with samples of forms and letters for a business to use to minimize the amount of bad debt that they incur doing business with their customers. In the future, I will select topics from her excellent book which will answer common questions that all businesses have with regard to dealing with their customers that owe them money and how to prevent it from happening in the future.

You can find this publication as well as others at Michelle's website:

http://www.michelledunn.com/

Tell her Marvin sent you!

Seeing no benefits to using a collection agency is by far the most frequent objection that I receive when talking with potential clients. They fall into two catagories: those that just make so much money/profit and those that don't want to offend their non-paying customers by placing them for collection.
Huh?
What's wrong with "free" or "found" money going directly to the bottom line? Why worry if you make a former customer angry, they are using one of their competitors by now anyway. Another concern is that they will bad mouth you in retaliation...well, you can be sure that they are not out there singing your praises once they fall past due. They have moved on and so should the business by sending their accounts to a collection agency.
There is a saying " there is no such thing as an unpaid bill". Business compensate by raising their prices for those of us that do pay our bills.

Attorneys have problems collecting their fees

I read an article by by Nora Lockwood Tooher, Dolan Media newswires this morning concerning attorneys unable to collect their fees from clients....yes attorneys have collection problems, too!

The article stated that many attorneys are reluctant to sue their clients for past due fees because the suit can trigger a malpractice claim or a disciplinary complaint to the Bar Association regardless of any merit. In addition, some malpractice insurance carriers have riders in their policies prohibiting the attorney from suing their clients for past due fees.

A logical alternative is for an attorney to use a collection agency to collect those past due fees. At JP&C, we collect for several law firms and some of those attorney clients did receive complaints about their services at the Bar Association. One could argue that the complaints were frivilous, why didn't the debtor client file the complaint before the account was placed for collection?

This happens with other, non attorney clients as well. The debtor does not have the money to pay the bill so retaliates with a complaint to an appropriate regulatory agency if there is one. Even if there is no formal complaint filed, all of a sudden the bill is disputed, the first time our clients have ever been notified that their customer was unhappy with the service.

At that point, we try to find out how much the debtor does feel that they owe which allows us to at least determine if the debtor just doesn't have the money or get a settlement for our client.

You too can use that tactic with your customers who are disputing a portion of their bill and you will get payments that you might otherwise not receive.