Collecting Your Money

Shoppers Still Stick to Payday Purchases

2010-10-03T08:39:00.002-05:00

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

2010-03-17T05:55:00.002-05:00

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

2010-02-25T17:01:00.002-06:00

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!

2010-02-08T08:17:00.003-06:00

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

2010-01-22T14:29:00.003-06:00

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!

2009-10-03T09:21:00.002-05:00

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

2009-07-08T09:23:00.002-05:00

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.

Poor credit = poor chances of getting a job?

2009-06-22T06:22:00.002-05:00

An article in the Austin American Statesman's Sunday edition described a growing number of employers practice of using an applicant's credit record as a factor in the hiring process.
That doesn't mean that the server behind the counter at Burger King has an 800 FICO score but it could mean those looking for financial and mid and high level jobs will have their credit ratings placed under greater scrutiny.
And why not? In a tight job market, why not get the best available candidates that HAVE GOOD CREDIT? The theory is that people with good credit behave more responsibly and are less likely to be tempted to steal from their employers. Studies by automobile insurance companies show that those insured with good credit are, in general, better drivers thereby having fewer claims and creating more profit for the insurance company.
The bottom line is that a dinged credit report can have much greater consequences than just preventing a consumer from getting a loan and either keeping your credit report in good shape or cleaning up a less than good credit report is more important now than ever.

Two types of collection agencies

2009-05-27T17:26:00.003-05:00

There are two main types of collection agencies, those that operate ONLY on a percentage of what they collect and those that charge a flat rate per account placed or sell the right to place a certain number of accounts within a certain amount of time for a flat fee.
I'm a member of several credit and collection organizations and groups and this morning a PR piece about an agency was part of one of those groups. That agency charges $5-$15 per account placed regardless of dollar amount and they claim that a gentle nudge is all most people need to pay and that's why they can charge so little.
As a 20+ year veteran of the collection industry, I have learned that a very, very small percentage will respond to letters from a collection agency. Phone calls are what generates payments, if letters and invoices did, there would not be over 5,000 collection agencies in the US alone.
As a contingency agency, J P & C gets paid ONLY if we collect for our clients while the other type agency gets paid whether they collect any money for you or not. As a collection agency owner, I know that they cannot afford to spend any money on phone calls, more that a letter or two or trying to locate a missing person that owes the money and stay in business very long.
While it may seem like a bargain to pay $15 for someone to collect a $1000 account, the bottom line, who is more motivated to do a good job for you, someone who already has your money beforehand or someone who relys on getting results for their clients BEFORE the agency can get paid?

tough times demand NOT so tough techniques

2009-04-15T16:57:00.002-05:00

It is a common misconception that a debt collector, whether with a collection agency or with a company collecting their own past due accounts will be more effective if they are hard nosed with the debtor.
That technique may work with a few people out there but for the most part and in this economy, you had better be nice and in a problem solving mode or your bill is going to the bottom of the pile to be paid.
What's one to do differently? Well, add persistance to your list of tools. In the past you may have contacted your accounts once a month, maybe twice and you were a little more firm with the terms of the debt on each call.
Consider calling more frequently, keeping the calls shorter and more relaxed in tone. After a while, your persistance will pay off in increased visibility. You can still manage the same number of accounts even though you are calling more often because you are spending less time on the phone.
Don't take my word for it, try it for two weeks to see if it helps and let me know how it worked out for you.

Medical accounts collections

2009-04-03T05:34:00.002-05:00

By far, medical bills comprise the majority of accounts placed with collection agencies, not because the the doctors are heartless but because of the sheer volume of unpaid medical bills.
To give you an idea of how the average consumer prioritizes their medical debt, consider that a collection agency will receive a payment, not necessarily payment in full, on only 1 in 4 accounts placed. Put another way, 3 out of 4 medical accounts at a collection agency will never receive a payment at all. Would you buy a lottery ticket with those odds?

Here at JP&C, we have a debtor with an $80 medical bill placed in 2007. She buys a money order for $2 every month and sends it in to be applied to her debt. She has never responded to our phone calls or letters so we don't know if she is sending the $2 as a statement of displeasure or because that's all she can afford and wants to do the right thing.

I believe it's a statement and it's one that I admire and applaud.

Sad but true

2009-01-31T04:38:00.002-06:00

Have you ever wondered why companies and medical practices turn their past due accounts over to a collection agency? To hear a lot of reactions from the debtors, you would think it is for revenge or to be just plain mean. It's not of course, it's because the creditors are OWED the money and they want to be paid. In some cases whether or not the creditor gets paid can mean the difference between staying in business or NOT!
I had a publishing client call recently and he told me that he is shutting down and trying to sell one of his magazines because NOT ENOUGH ADVERTISERS ARE PAYING THEIR DEBT to justify keeping the money losing publication alive.
We also her debtors complain that "the doctors" make enough money so if they don't pay their bill, it's no big deal to the doctor. What these patients don't consider is that most medical practices have considerable overhead and most doctors begins practice with literally hundreds of thousands of dollars of student loans that need to be repaid.
In this economy, it will pay you to turn your accounts receivable over to your collection agency sooner than you might currently be placing those accounts. A/R are not like a fine wine, they do not get better with age.

UT Informal Class - Collecting the $ That You Are Owed

2008-12-23T12:51:00.002-06:00

My Winter class with UT Informal classes will be Tuesday, February 3, 2009, 6-9pm and the topic is "Collecting the Money that You Are Owed". The class is targeted at the people responsible for collecting Accounts Receivable at the companies and medical practices where they work. We start at the credit or patient form all the way thru filing suit or placeing an account with a collection agency. The course is in the print catalog that is currently on the streets or at the following link.

https://informalclasses.org/index2.html

Click on view courses, click on "Agree" and enter Activity# 5806.601

Most attendees come away picking up a couple of ideas that not only help them collect more money for their company but makes the job a little more enjoyable. If you have any questions about the course or suggestions for topics covered, by all means contact me.
I look forward to seeing you.

Christmas is sooner than you think

2008-11-01T20:43:00.002-05:00

Christmas is a wonderful time for families, not so good for businesses. Why? Unless you are in the retail business, the consumer's bill can take a back seat to paying the debt that you are owed.

Everyone wants Christmas to be a great holiday for their families and others. The folks that owe you money want to provide an enjoyable Christmas for their families and rightfully so, everyone wants to make this Christmas the best ever. To accomplish that, they tell themselves that they will pay your bill in January, right after the holidays. January comes and other bills become more important and they tell themselves that they will pay your bill with their income tax refund.

See where this is going?

The strategy that will help you keep the cash flow coming in through January and beyond? Get permission to run checks by phone of debit/credit card payments on a pre-arranged schedule.

Contact me for more detailed information on how to set these plans up, you'll have a happier new year for it!

UT Informal Class on helping you collect your money

2008-09-10T17:31:00.002-05:00

I will be teaching a 3 hour class at UT Informal Classes, "Collecting Money You Are Owed" on Tuesday, September 23rd, 6 to 9pm.

If you work in an office or own a business and have customers that owe you money, this course will possibly help you collect more of the money that you are owed.

You can reach the UT Informal Classes online at:

https://informalclasses.org/index2.html

Click on: view courses on the left side options

enter activity# 5806.301

UT charges the following for the course: Resident: $31.00Non-resident: $36.00

I have taught the course for several years and all previous participants have come away with at least one good idea for increasing their collections. Usually those ideas come from others in the class and that's the way it should be, come share your successes and failures we will all learn!

The US Post Office has an unusual room at each location

2008-07-30T08:03:00.002-05:00

Have you ever had a customer promise to send a payment on their past due bill with you, say in the amount of $500 and when it arrives in the mail it is $100?
Unfortunately for you, the envelope went thru the "incredible shrinking room" that exists in each post office. Any form of payment that enters comes out denominated in a smaller dollar amount than when it went in. Fortunately, it didn't go into the "lost in the mail" room where the payments never seem to make it out to you in spite of the customer's assertions that it was mailed and now it is your problem.

Hesitant to turn accounts over for collection?

2008-07-21T08:01:00.003-05:00

It can be hard and costly to get new customers, clients or patients. Everything that you read says that it is always cheaper to keep existing customers, clients or patients than getting new ones.

While this is true, do you really want to keep those that are not paying you? It is easy to be optomistic about collecting the money that you are owed, sure some will pay and it's a fine line between handling your accounts receivable in a sensitive way so that you keep your customers and avoid alienating them in the process.

Human nature being what it is, your customers that are past due will do one of three things, two of which are BAD. Ideally, you will get paid, that's the GOOD. However, if someone owes you money they may feel bad about it and will quit using your services to avoid dealing with their past due bill or worry that you will refuse to deal with them, that's BAD. Once they have left you, they then have no incentive at all to pay your bill in a timely manner, they are now buying from someone else. That's BAD.

The best way to deal with this is to have a firm credit policy in place, that is have a process in place to collect the money, set a time limit to place an account for collection and STICK TO IT.

Telephone Tip

2008-07-03T07:15:00.000-05:00

When you’re on the phone with someone regarding payment of a bill they owe you, stay on the phone until you are clear about what happens next.
Will they be:
· Paying all or part of your bill?
· Mailing, wiring or bringing it to your office? When, exactly?
· Calling you back, if so, by what deadline?
Be wary when you hear “try,” “do my best,” “think I can,” “should be able to,” or anything along those lines.
Don’t hesitate to pull the plug on an account you can’t collect after 120 days. We spend each day on focusing on collecting your money so that you can do what you do best.

Income Tax Refund Season

2008-03-12T07:18:00.002-05:00

This is a good time of the year to give your consumers and patients a little extra time to get their income tax refunds to pay you the money that that they owe you. However, keep in mind that although they may promise to pay you when they get their tax refund, when that money hits their bank account or the check arrives, their priorities change and they may decide to reward themselves with "their money" by spending it on themselves instead of keeping their promise to you.
For that reason, it's a good idea to ask when they filed the return and to insist upon a good faith payment of 10% now in exchange for the extension. That helps solidify the committment in their minds and gets you some immediate money on the account.

what happened today

2008-01-12T06:33:00.000-06:00

this is a test of my blog, stay tuned, I will be posting periodically, mostly stories from the collection floor and how they might help you collect the money that is owed to you by your customers or patients.