This Most Important Debt Collection Tip
Will Recover More of Your Bad Debt

One very important debt collection tip is to make sure all your customer agreements and contracts clearly state that you intend to include and pass on the costs for any collections onto the customer. Your customer needs to know that if their fail to pay their bill and it becomes seriously delinquent such that you end up hiring an outside debt collection agency, your customer will be responsible for any such collections costs, including interest.

Be sure to check with your state's debt collection laws, but it is legal in many states to do so. However, it must be included and written in the contract upfront, so that there's no confusion later.

Not only can your business recover its bad debts, you can effectively hire a debt collection agency for free! An additional benefit is that your customer will know that you're serious about getting paid. Knowing this upfront, many of your clients will pay you on time, wanting to avoid not only the negative of collections, but having to pay additional interest and penalties.

The point is it has to be stated so in the beginning.

This passing on collection costs is only true if you hire an outside collection agency, since this is considered a fixed cost expense to your business. This is also another reason why you should consider outsourcing all your delinquent accounts that have gone over 60 days past due. Not only are you better likely to recover more of your money faster, you can also recoup these costs.

You don't get this benefit if you do your own internal collections. Even though you may have to hire and/or dedicate existing employees to these debt collection tasks, you don't get to add those additional expenditures onto your customer's past due bill.

When you factor in the additional labor time, training, costs of additional phone calls, letters, postage, not to mention the time taken away from your business' money-making, core activities, not to mention risking the possible legal ramifications of not knowing the federal and state guidelines that regulate debt collections, many business owners come to the conclusion that its far less expensive to outsource debt collections to third party collection agencies. This debt collection tip will save your business lots of time, money and frustration.

Along with the many tools, resources, strategies, tactics and years of experience they offer, debt collection agencies also have the ability to report your seriously delinquent customers to the credit bureaus. Business owners collecting their own past due accounts don't have this ability.

This is a very powerful incentive, because unless you're dealing with a habitual "deadbeat" non-paying customer, most people value their credit rating. They know how damaging it will seriously impact their ability to get a mortgage, car, credit cards, or even employment and insurance.

Learn additional debt collection tips here.

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