Small Businesses Are Making Big Mistakes When They Try to Collect Their Own Debts
As the economy worsens, stressed businesses are being hit by a wave of defaulted loans these days, and are finding it increasingly challenging to collect on their bad debts.
In fact, a recent study released by Fitch’s Prime Credit Card Delinquency Index revealed that a record 4.04 percent of credit card debt was more than 60 days late in January 2009 - and there are similar findings with car loans, consumer loans, student loans, and numerous other types of debt.
It may be tempting for small companies to try to save money by doing debt collection on their own - but that is usually a costly mistake.
Mark Remington, of http://www.controldatainc.com, reveals the biggest mistakes that many business owners are making when they attempt to collect debts.
“Businesses will generally end up hurting their chances of ever collecting bad debts if they attempt to do it on their own,” according to Remington.
Here are some of the most common mistakes that business owners make when trying to collect a debt on their own:
1.) Calling or making arrangements with debtors after sending the debt to a collection agency. Any time that you make arrangements with a debtor after it’s been sent to collections, the account is almost never paid, according to Mark Remington. Collection agencies have spent years developing a collection campaign that is highly effective. After all, it’s their livelihood.
2.) Waiting too long to place the account with a collection agency. The sooner an account is placed with a collection agency, the more likely it is that funds can be recovered. While business owners wait, the debtor may move, die, get divorced, lose their job, or declare bankruptcy. Someone who owes money on a bad debt is generally going to see their financial situation get steadily worse, not better.
3.) Giving up because a debtor says they filed bankruptcy. Anyone can SAY they filed bankruptcy; it doesn’t mean they actually did so.
When a customer defaults on a debt, the best way a business owner can increase the likelihood that they will collect on that debt is to hire a professional collection agency to do so, according to Remington.
- Contact Information
- Mark Remington
- Control Data Inc.
- Contact via E-mail
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