HOW Creditors Create Bad Debts and Discourage Sales

Does your company...

1. assign collection responsibilities to unskilled, under-trained or unmotivated personnel?

2. ignore or give secondary consideration to returned mail?

3. accept arbitrary and inconsistent payments based on what debtors claim they can afford to pay?

4. casually write off "out of business" accounts as uncollectible?

5. accept an  assets-only purchase of a debtor's business as the buyer's release from liability?

6. accept principal-only debt repayment instead of enforcing contractual default penalties?

7. accept that corporate veils are too difficult and too expensive to pierce?

8. believe that negotiating a lower agency or attorney contingent rate reduces your collection costs?

If you answered YES to any of these questions, you should know that...

1. Making collection calls is one of the least desired and most feared jobs.  Even so-called professional collectors spend more time procrastinating, than actually collecting.

2. Proper handling of returned mail is one of the most neglected creditor responsibilities, yet is required to maintain a healthy cash flow and retain customers.

3. Debtors default on their payment promises more than 70% of the time.  Effective collection strategy requires formally structured and legally binding repayment agreements.

4. "Out of business" does not necessarily release corporate debtors and officers from credit obligations.  Collectors can be trained to overcome such obstacles.

5. Many assets-only sales involve fraudulent transfers that can be recovered.

6. Creditors who do not enforce default penalties do not understand the far reaching costs of delinquency.

7. The corporate veils of small and mid-size businesses frequently lack integrity and can be inexpensively pierced.

8. The contingent rate structure is designed by collection agencies and collection attorneys to market their services.  It is always about how much the agent can make and never about how much the creditor can save.  Every point saved cuts two points off the creditor's net recovery.