Customers, both business and consumer, know that the collection process takes time and costs money. Most pay their bills responsibly, but many will routinely wait 60 days beyond the "due date" before even considering paying. And when dealing with small businesses, some customers also gamble that the company will be too disorganized or crunched for time to even bother with the collection process.
So, while nobody likes to chase down customers and remind them they need to pay their bills, it unfortunately is a very real part of every business' operations. The trick is to figure out how to do it as effectively and efficiently as possible without stepping on any legal land mines.
Collections professionals the guys whose only business is to go after delinquent debtors and encourage them to pay up tell us how technology has made their lives easier. And, the good news is, some of the technological fixes that help them can help any business get its due, and work more efficiently with lawyers and collection agents should the need arise.
"In the last two years, everything has changed right across the board," says Richard Hart, general manager of Woodland Hills, Calif.-based Direct Recovery Associates. "The collection process has become even more uniform with new technology and collection software that's allowed us to automate our whole process."
How The Pros Do It
Collection agents are using the Internet to research the companies they serve and to track down contact information for "missing" debtors. They are also using intranets to share information across offices and organizations, and extranets and remote access software to connect to clients' systems to pull account information and provide instant updates. Detailed databases help them keep accurate records of who was contacted when, how, and by whom, and computer telephony integration (CTI) creates accurate-to-the-second records of phone calls both necessities for the unfortunate accounts that head to litigation. Here's how it works.
"A couple years ago we bought this incredible software that's just changed everything," says Hart. "It allows us to communicate [better] and to act as a more effective middle person between the client and the attorneys when we're dealing with lawsuits. As far as correspondence and little things like note keeping, it's all automated. Every time there's a contact, there's an entry made."
This database keeps detailed records of each delinquent account: how many times an individual has been contacted, when the last contact was, and what the next step should be. It's all on a schedule, and reports are run each night. When Hart's collectors walk in the door in the morning, they have a detailed list of daily contacts.
"Then they are able to customize their notices or generate a boilerplate notice, so they'll work with their accounts one after the next," he says. "As soon as they issue a command on the computer that finishes the transaction for one account, another one instantly pulls up. And they don't [even] have to dial, they just push one button and it dials the number for them. It couldn't be any easier."
"It registers to the second when and by whom the call was made. It also allows us to use 'hold' restrictions," says Hart. "When we have a claim that's been disputed or there is some problem or a caution that we need [to make note of], it won't allow the collector to actually make the call. So it alerts us gives us double, triple alerts so we never mess up or step over the line."
These CTI records are the most important information when it comes time to take a case to court. And, adds Hart, "Getting the affiliated attorneys the information they need through automated software makes dealing with them just that much easier."
Not only does Hart find it easy to track account contact information with the software, but he also has a much easier time tracking finances. All of this in turn helps customer service.
Do It Yourself
While the software that Hart uses is geared specifically toward collection professionals, there are numerous software packages that will help businesses track customers, accounts, and collections themselves. Many will provide templates for collection letters (usually with varying degrees of threat), that will get the point across while presenting a professional image and keeping well within the legal bounds.
Additionally, call center and accounting software can often be linked, if they do not come together in the same package, to give an accurate picture of each client. Messages that alert receptionists or call center operators to transfer customers to the accounting department before selling them additional products or booking new appointments can also help keep delinquent debtors from racking up additional debt.
A good accounting package will also give users a quick and accurate picture of what's come in and what is still due. "I used to spend Friday all day Friday computing who gets what and where," says Hart, thinking back on the confusion. "We would do weekly remittances on Friday, and what used to take me all day, literally takes me about three minutes of printer time."
With the help of technology, any small business that's willing to put up the resources, both the staff time and the cash to purchase the necessary software, can manage much of the debt collection process itself. There will, however, always be times when the assistance of collection professionals is needed.
Hand It Over
"Skip tracing" tracking down current and complete contact information for debtors who have either moved and left no forwarding address or for whom a business never had complete or accurate information in the first place is one process best left to the experts. Despite the fact that much of the searching is done via Internet, collection professionals have access to the most up-to-date and thorough resources including the American Collectors Association database, the major credit bureaus, and bankruptcy records, death records, and property owner searches.
If and when you decide to hand accounts over to a collection agent, technology again makes the process easier for all involved. Each collection agent prefers to receive account information differently, but they all prefer information in an electronic format. Hart's Web page has a data entry field that allows clients to enter in accounts one at a time, which is great if new or existing clients have only a few accounts to turn over at a time, but he knows that's not realistic for large numbers of claims.
"We take their information in whatever way is most convenient for them," says Hart. "If we get a client that wants to ship us 2,000 claims, usually it's on some accounting format that involves them just pushing a couple of buttons. That way they don't have to go and fill out the blanks. They can just shoot us a spread sheet or whatever their format is, and we can very easily import it into our system."
Other collection agents coordinate software with clients so they can access the system like a remote user and download new accounts or transfer updates. Both methods make life easier for both collection agent and client, and reduce the likelihood of mistakes.
Whether you opt to handle collections in house or turn it over to the "experts," the more detailed and accurate information that you keep on each account and record electronically rather than on scattered pieces of paper the easier it will be to collect and the sooner you'll get what's coming to you.