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Become the Squeaky Wheel!

A Credit and Collections Guide for
Everyone
by Michelle Dunn
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COLLECTING PAST DUE ACCOUNTS: Letting a Call Get Personal

By Jim Finucan
C 2004 Tiare Publications

"How about you? Didn't you ever fall behind on a bill and couldn't pay on time?"

When a debtor says something like this - be careful! The debtor is trying to pull you off your professional pedestal and personally involve you in the call. If things head in this direction you'll lose control of the call. Who knows where it might lead? Probably not to the goal you want.

"That has nothing to do with your bill." Such a response is a way to stop an attempt to involve you personally. Quickly move on to obtaining information or dunning for the balance if the call has reached that stage. Sometimes when you question the debtor he may try to turn the tables on you.

"How much do you make a month"?
"That's irrelevant."
"If it's irrelevant then so is how much I make."
"Not true, Mr. Jones. You have a debt here and that makes your income a concern to this office,"

Not allowing the debtor to draw you into a verbal duel keeps the call on a professional level. You need to keep your wits - as well as a touch of sensitivity - in order to know when to make the move over to the debtor's side and gain his cooperation.

If you don't think some debtors are extremely intelligent you underestimate your opposition. Just as you get better with each call you place, so do debtors who repeatedly find themselves in collections. An experienced debtor may try to draw you into the call on his level and then take control.

"It's just so hard with three kids to feed. Do you have kids?"

Don't answer a question like that. Another favorite line is:

"How can you do that job?"

Ignore this, too. Reply with a question related to the bill or go into the dun.

Remember, the debtor is attempting to take control of the call, trying to hide behind insincere sentimentality. These tricks have worked for him in the past. They shouldn't have any effect on you.

Jim Finucan knows all about the dances, dodges and delays debtors will try to pull. Let Jim show you how to double or even triple the money you collect from your accounts receivable. Check out his unique collections manual "Past Due." For more information visit: www.tiare.com/pastdue.htm

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Collection Tips

By Michelle Dunn

Let your customer know the terms of sale when you make the sale or at the time of the order.
Customers are usually happy to comply if they see your stated credit terms right from the beginning.
Send a friendly reminder notice. Many businesses pay 90-120 days after purchase. Send a reminder notice to speed up payment. E-mail or fax is a fast, good way to touch base with a slow paying customer.
Make a phone call. You should always assume payment has been made and ask, "When did you send your check?" Then don’t say anything; let them break the silence, no matter how long it may seem.
Pick up the payment in person. Once you show up in person to pick up a payment you should never have to pick up a payment again, if your customer has every intention of paying. If you repeatedly have to go to their place of business, you may want to put them on a COD basis.

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Easy Credit Forms for Businesses

by Michelle Dunn

If your business extends credit to its customers, you probably use different forms and notices. Here are four reasons why your forms should be simple and easy to understand:

"Plain English" is good for Customer Relations.
Customers Expect and Need to Understand what you have to say.
Customers need to understand their obligations.
"Plain English" and easy to understand forms can save you money.

Your forms and notices should:

contain everything you want your customer to know about your credit policies
limit content to what is essential to protect your company’s interest
say everything the law requires, in the manner the law requires
be simple and easy to understand as well as clear and organized
neat and easy to read

You should also eliminate unnecessary words, and keep sentences and paragraphs short. When you use lists and use examples it helps the customer to understand better.

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How To Collect Your Healthcare Receivables

by Michelle Dunn

How can you, the professional healthcare provider, improve your return on receivables and help ensure that your practice continues to be profitable?

First of all, an estimated 85 percent of all medical services are paid for through credit arrangements. This makes you a credit grantor, much like a department store, Oil Company, utilities and others. You are different in a couple of ways, such as:

In most cases, your “customer” would rather not have to use your service.
Although you make a patient feel better, there isn't anything tangible to be a reminder of your service.

When it comes time for the patient to pay their bills, yours is often at the bottom of the pile. You are competing with other credit grantors that supplied a tangible product and therefore your collection problem is more difficult.

This is why it's important to learn as much as possible about your patient and make your credit policy clear before service is actually given. This is when the patient is most likely to be cooperative.

The information you should obtain is as follows:

Patients full name and birth date
The full name of the person financially responsible for the patient, full address, phone numbers for home, work, and a relative.
Social Security number
Present employer, job title, name of supervisor, address, & phone number
Name and address of insurance company

Also, verify insurance information at this time if possible

PREDICTING POTENTIAL COLLECTION PROBLEMS

Here are some things to look for that will help predict a potential collection problem:

Has the patient had several jobs in a short period of time?
Has the patient moved often?
Is the patient having personal problems?
Does the patient have a phone?

If any of these signals appear, you will want to discuss them with the patient. You might need to determine if this is a hardship case or if you can set up a payment arrangement

COLLECTION SCHEDULES AND PAYMENT ARRANGEMENTS

Some tips for billing and collections that have worked well for professional credit grantors are as follows:

Ask for payment at the time of the treatment, if possible. If they have insurance, ask for payment of the portion of the bill that will not be covered by insurance.
Provide an itemized statement within 30 days from their visit, if you cannot provide one at the time of treatment.
Send another statement 30 days later.
If no payment is received 14 days after the second statement has been sent, send a friendly reminder.
Call if there is no response 10 days after the friendly reminder is sent.
If there is still no response, send a final letter explaining that the account is being placed for collection.

WHAT NOW?

There is a limit to the amount of time and effort that you should spend trying to collect on past due accounts. You will know when you have reached that point if you are not getting any response at all from your patient. You will know that any further collection efforts on your part will be unsuccessful if any of the following occurs:

No response to your statements, letters and phone calls
Missing scheduled payments as per your arrangement, for no reason
Repeated complaints
Starts denying responsibility
Mail is returned and you don't have a valid address
Marital difficulties
Phone is disconnected and there is no new listing
Job loss

If any of these problems occur, you should place the account for collection immediately, the longer you wait the more difficult it is to collect or locate the debtor.

DOING IT YOURSELF

Some healthcare professionals, hospitals and clinics feel that they can collect past-due accounts themselves. This could save the fee charged by a collection service.

Some of the costs involved in doing it yourself are:

SALARIES — A collection supervisor and collectors will have to be paid.
TELEPHONES — Collectors spend a lot of time on the phone, some of these calls will be long distance.
POSTAGE — Collectors send a lot of notices and verifications of bills and there will be a large increase in postage.
COMPUTERS, SOFTWARE, AND OTHER EQUIPMENT — This could involve a big initial investment. Also, you may need to be able to do some skip tracing, and credit reporting on these patients.
TRAINING — Collectors need to know the laws in the state you are located and also follow the Fair Debt Collection Practices Act. They may need to be trained in skip tracing, collection techniques and letter writing.

Things to look out for when collecting yourself:

Make sure your collection staff is thoroughly trained in consumer debt counseling, state and federal credit and collection laws.

Do not spend too much time, which is money, on pursuing accounts that you don't feel you will collect on.

Have at least one collector who is familiar with small claims procedures

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Telephone Collection Tips

by Michelle Dunn

Advantages & Tips for Collecting by Telephone

Inexpensive — Compared to personal visits and individually typed letters
Immediate — Produces some sore of answer the moment the contact is made
Personal — Allows an exchange between two people
Informative — Allows you to ask questions, obtain information and take appropriate action
Flexible — Approach can be varied as changing situations demand
It should result in agreement as to what is to be done
Use voice mail or answering machines if available. Leave detailed complete messages and speak slowly
Always be courteous
When asked why you are calling, never say it is in regards to a debt, regarding an invoice is better
Create a send of urgency by leaving a deadline time to hear from them
Get the name of a person in charge of issuing checks or paying bills
Ask for the best time to call them in the future
Leave complete messages, your name, company name, phone number, and the request for a return call
Get the name of the person taking the message
Ask when the person you need to speak with will be back, and call at that time

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Why will my customer pay a collection agency if they wont pay me??

by Michelle Dunn

So many clients ask me, "what do you do that I haven't done?" or, "why do you think the debtor will pay you when he wont pay me?" Even after they place an account with me and I send them the check they are shocked and say, "how did you do that?"

Sometimes a debtor is just holding off paying you to see how long they can hold on to their money. They may not think you're serious about collecting and therefore just put you off. Once they receive a letter or a phone call from a collection agency, they see that you are serious and sometimes that is enough to get them to pay right away. But that is not always the case.

If you wait too long to try to collect, the debtor may also think you're not serious. After all, the invoice was due 90 days ago and you never even called! They will think that since you're not worried about the bill, neither are they. In a way, by not trying to collect either by calling or sending a reminder notice, you are setting yourself up for non-payment.

Some ways to avoid this are to have your terms clear on your invoice. On my invoice I have my terms in red bold ink down near the balance due column. Sometimes I circle them with a yellow highlighter. I call in a week if I don't have payment, because my terms are due upon receipt. I just call or email to ask if they received the invoice. If they say yes, I just say, "Great! So a check will go out this week?" Also, any time possible, fax your invoice and call to be sure they received it. This works very well in my experience, and saves postage and time.

Another way to let a customer know you expect to be paid on time is to have them sign a credit application and list a couple of references. This way they know right away you're serious about being paid.

Another reason your customer may pay a collection agency is because a collection agency can report the debt to the credit bureaus and have it appear on their credit report. Some debtors don't care about this since they have bad credit already but any responsible customer will care.

Sometimes a debtor will pay a collection agency just because of the letters and phone calls. Even though a collection agency does not state that they are a collection agency on their envelopes, the debtor knows who it's from and has a feeling of embarrassment. They are afraid everyone will know that they did not pay you.

Debtors also pay a collection agency because a collection agency spends all day doing collection work. You have your business to run and you don't have time to call every day, send letters and follow up on promises. A collection agency can do this, which lets the debtor know you're serious and want to be paid

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What Works in Collections

by Michelle Dunn

Do you have customers that owe you money? Do you call and send letters and only end up frustrated? Here are some collection tips to help you stop being frustrated and collect some of the money that is owed to you.

Make your first collection call when the debt is 5 days past terms.
This can be a friendly call where you just tell the customer that you want to make sure they received the invoice and that there weren't any problems. If they say, they did receive it and there aren't any problems, ask them if the invoice has been scheduled for payment and when you can expect the check. Be very friendly and nice, always keep your tone friendly (if this is a first offense) and portray an attitude of trying to help.
Send a letter confirming your conversation the same day.
After you take the first step of calling after the invoice is 5 days past due, send a letter confirming whatever was said in your phone conversation. The letter can be very nice, and if needed enclose a copy of the invoice. Just state that you wanted to thank them for speaking with you today and confirm that a check in the amount of $ will be mailed on whatever date as per our conversation.
Make personal visits to the debtor.
If the debtor is local, you can stop by anytime to pick up payment. A trick I use is to make it a habit to stop by other times as well, when you are not picking up a payment. Then if the customer is past due and you go in, just be friendly and say you were in the neighborhood and know there is an invoice that's past due and thought you would just stop by and pick up the check. This usually works pretty well, and in most cases will only have to be done once.
When calling a debtor, speak as though confident the payment was made.
For example, you might say, "I know you said you were going to send your check last week, but I haven't received it, which day did you send it on?", instead of, "I didn't receive your check, did you send it yet?" When they stumble with an answer and say the check was not mailed, act very surprised and ask, "Oh, why not? You'll be mailing that today then?" This usually works pretty well; it causes the debtor to feel a little embarrassed, but they can easily save face by paying immediately.
When making collection call, ask a question and then remain silent.
No matter how long the silence goes on, DO NOT SPEAK! Just remember, if you're feeling uncomfortable with the silence, the debtor is feeling just as uncomfortable if not more. Let them break the silence with an answer. This is tough the first few times, but it works great. You will get used to it after a while and find that it works well.

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What if I receive a bad check?

by Michelle Dunn

This question is asked of me by so many people that I decided to write an article about it. Most people get a check for payment of services or merchandise and deposit it into their account and forget it. Then suddenly the check is returned for insufficient funds! Most people don't know what to do when this happens.

When people ask me what should I do with this check, here is what I advise:

Call the customer immediately and tell them what happened, tell them to send or come in and pay with cash or a cashiers check or money order right away. Be sure to add any NSF fees that are allowed by law. Be sure to make a note on their account that you have received a bad check; you may want to only accept cash or money orders for future payments, though, if it's a long-standing customer and this was truly just a mistake, you may not want to do that.

If you do not get an answer and can only leave a message, send out a Demand For Payment notice, and send it by certified mail. On the bottom of the notice make a note that a copy of the notice is being sent by regular mail to ensure delivery. That way if they do not sign for the certified letter, you can be sure they received the notice by regular mail.

In your Demand For Payment notice, state the check number, amount, bank name, and who signed the check. I like to advise them of the penalties by law for writing a bad check. Also let them know of any bank fee that has been added. Give them 14 days to pay you, if they do not pay you within 14 days; let them know you will pursue the collection of the check through the appropriate legal channels.

After the 14 days, depending on where you are located, there are different avenues you can take. In some states you can call the police in the town where the check was written and they will go visit the debtor. In other states you have to file with the courthouse. Some businesses do not want to do these things and will turn the check over to an attorney or collection agency.

The worse thing you can do is just hold the check and wait for the debtor to make good on it. Act immediately! Your chances of recovering will be much better

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Top 7 reasons to use a Collection Service

by Michelle Dunn

It removes you from being the "bad" guy and making the collection calls
Collection Agencies have a knowledge of the laws on collections that you may not be aware of.
Collection Agencies can commit more time to collecting your money, since that is all they do all day.
Using a collection Agency frees you up to focus on what you do best.
Sometimes they can add their fee therefore providing you with a "free" service.
You don't pay them if they don't collect!
Your customers will know you are serious about your business.

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Prevent Bad Check Losses!

Tips to help you avoid bad checks.
by Michelle Dunn

The Do's of Check Acceptance:

Name address and phone number imprinted.
Current date only.
Compare ID picture with that of the person cashing or writing the check.
Make sure signature matches ID signature.
Make sure phone number is a working phone.
Ask for street address — no Post office boxes.

The Don'ts of Check Acceptance:

Don't let the check writer rush you.
Don't take any check or person for granted, ALWAYS obtain proper ID.
Don't accept prewritten personal checks. At least the signature should be written in your presence.
Don't accept unsigned checks.
Don't accept starter checks.
Don't accept two party checks.

When accepting a check,
remember what is important:

The Check

The Identification

The Person

Spotting A Possible Problem Check:

Checks that have a number under 300.
Checks that do not have a phone number printed on them.
If the address on the check is written by hand or if the current address is changed.
No photo ID.
Checks drawn on out-of-state banks.
Checks for more than the amount of purchase.
Two party checks.
Check number is handwritten, stamped or typed.
Loose checks not being recorded in a check register.

YOU DON'T HAVE TO ACCEPT A CHECK AS A FORM OF PAYMENT IF YOU THINK IT PRESENTS A RISK!

Spotting a Forged Check:

The check writers name is different than the name printed on the check.
If the top or side of the check is smooth and not perforated.
If the bank numbers across the bottom appear glossy or irregular.
Any difference or misalignment of type styles.
Printing on the check appears faint or photo copied.
Photo ID does not match information on the check.

REMEMBER… Acceptance of a check as form of payment is a privilege extended by you.

Writing a BAD CHECK is a crime in every state, and is punishable by a fine and/or imprisonment. There are an estimated 450 million BAD CHECKS written every year. This includes checks written without sufficient funds or upon accounts that have been previously closed.

***PLEASE NOTE***
Bad check laws do not apply when an individual stops payment on a check UNLESS it can be proven that the issuer of the check intended to stop the check when he presented the check for payment. Some states authorize the receiver of a bad check to collect a service charge to compensate for bank fees and/or cost incurred as a result of receiving and collecting on a bad check. The following is a list of approved fees that can be collected on a returned check in each state:

ALABAMA $27

ALASKA $25

ARIZONA $25

ARKANSAS $20

CALIFORNIA $25 for first check and a service fee of up to $35 for each subsequent check to the same payee

COLORADO $20

FLORIDA $25 if face value does not exceed $50, $30 if the face value exceeds $50 but does not exceed $300, $40 if the face value exceeds $300 or 5% of the face value of the check, which ever is greater.

GEORGIA $25 or 5% of check, whichever is greater, to be paid in 10 days.

HAWAII $20

IDAHO $20, notice must have been given at time of sale.

ILLINOIS $25 OR all costs & expenses.

INDIANA $20 or 5% of check, whichever is greater, not to exceed $250, due in 10 days.

IOWA $20 posted conspicuously or 5% of the face, which ever is greater. $50 if the check is presented twice.

KANSAS $10 due in 14 days

LOUISIANA $25 or 5% of face amount, whichever is greater, posted at point of sale

MAINE Through civil action only, not to exceed $50 or an amount agreed in contract with consumer

MARYLAND $25

MICHIGAN $25 to be paid within 7 days, if not paid as requested, but within 30 days the service fee is $35

MINNESOTA $20 posted at point-of-sale OR actual cost of collection not to exceed $30.

MISSISSIPPI $30 with payment to be made within 15 days

MISSOURI $20

MONTANA $30

NEVADA $25

NEW HAMPSHIRE $25 or an amount agreed to in contract with consumer

NEW YORK $20

NORTH CAROLINA $25

NORTH DAKOTA $20

OHIO $30 or 10% of face value of check, whichever is greater

OREGON $25

PENNSYLVANIA $20 if notice prominently displayed at point of sale, when check is issued and after conviction.

RHODE ISLAND $25 after 30 days

SOUTH CAROLINA $25 or $30 for checks over $100

SOUTH DAKOTA $30

TENNESSEE an amount up to $20

TEXAS $25 plus sales tax

UTAH $20

VIRGINIA $25

WASHINGTON fee not to exceed $40 or face value of check, plus interest of 12% per annum as long as check is not for payment of interest, collection costs or attorneys fees.

WEST VIRGINIA $15

WYOMING $30

WISCONSIN all reasonable collection costs.

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Should I Send One More Letter?

by Michelle Dunn

You're mad, you want to place an account for collection. You call a collection agency and find out the fee and what to do. Then you say, "Should I send one more letter? Maybe telling the debtor that if they don't pay I will place them for collection?"

Of course you can; you can do anything you want. But how many letters have you already sent? Have you threatened anything before and then not followed through? Will the debtor believe that you will really place them with collection? Also, how old is the debt? Maybe you didn't send any letters or never called, and the invoice is 120 days old. Do you think the debtor will take you seriously?

If you are asking this question, the answer is probably no. Place this account for collection and re-evaluate how you handle your receivables.

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How to Choose a Professional Collection Agency

by Michelle Dunn

You should be very careful about choosing a collection agency to work with. No matter which agency you choose, they are a reflection of your business.

Make sure the agency has the skills, knowledge and experience to collect on your particular type of account. This could be medical collections, service debts, student loans, child support or many other types of debts. It is important for agencies and creditors to know that each collection market is handled differently.

Discuss recovery percentage and rates. The percentage rate of commission may be less important than the agency's percentage of return on the total dollars you refer for collection. If you turn over many accounts but the agency doesn't collect many of them, even if you are being charged a lesser percentage rate, you may not be getting enough bang for your buck. An example could be that you place $1000.00 worth of debt for collection, at a 25% commission rate and the agency collects $300.00, you will receive $225.00. If you place $1000.00 at a 35% commission rate but the agency collects $500, you will receive $325.00. The commission rate by itself is meaningless, net return is the key.

Try to contact creditors in your industry that are currently using the agency. Find out if they are happy with the services. You can also contact any associations the agency may belong to, the Better Business Bureau or the Chamber of Commerce.

Make sure the agency complies with all state licensing and bonding laws. Find out how long the agency has been in business, how many clients they have, if they have won any awards and if they have insurance.

Make sure the agency you choose complies with the Fair Debt Collection Practices Act (FDCPA), this is critical. These are the laws that regulate the collection industry. Also, what can the agency do for you? Do they report to the major credit bureaus? Do they provide skip tracing? Is there a monthly or a sign up fee to do business with them?

You want to choose an agency that will represent your business in a professional manner. You want a satisfactory rate of recovery while maintaining your public image. Your careful choice in choosing a collection agency strengthens your bottom line and helps you to retain customers leading to a more profitable business

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Publishers, you have permission to publish this article electronically or in print, free of charge, as long as the bylines are included. A courtesy copy of your publication is appreciated: michelle@michelledunn.com Michelle Dunn, PO Box 40, Plymouth NH 03264

Title: Should I start my own Collection Agency?
Author: Michelle Dunn
Author website: www.michelledunn.com
Word count: 301

SHOULD I START MY OWN COLLECTION AGENCY?

If you are wondering if you should or can open your own collection agency, the answer is yes, you can! There are some things you should do before opening your own agency. You should have experience in the collection industry. You must know what type of business the collection business is before you can understand what you are getting into. You need to know the day-to-day activities of collections. You need to know the laws in the state you are in and the states you will be collecting in. You want to have experience dealing with people and negotiation skills.

You should also be ready to spend a lot of time getting people interested in your business. If you have worked in the industry for other people, new clients will know you have experience and be more comfortable placing accounts with you. If you don’t have any experience, you need to build credibility so potential clients will know you can do the job and do it well.

Write a business plan. If you are going to borrow money to start your agency you will need a business plan to show the bank. Usually a business plan is made up of:

An Executive Summary
A Business description
Marketing Strategies
Competitive analysis
Operations and management plans
Financial statements.

I have an example of a Business Plan and a Marketing Plan in my book, How to make money collecting money, Starting a Collection Agency. You should also include a cover or folder for your business plan. Include a title page and a table of contents. This will be very professional and impress any bank you may present it to.

You should LOVE collection work. You either love it or hate it! If you love it, you will be passionate about making your business work.

Michelle Dunn is the Author of the FREE e-book How to Help You Get Paid, Credit & Collection Forms and Letters. She has also written and published How to Make Money Collecting Money, Starting a Collection Agency that is available from www.michelledunn.com and all major bookstores. For more information on Starting a Collection Agency, order her book for immediate delivery.

She is now publishing Become the Squeaky Wheel, A Credit and Collections Guide for Everyone. Look for her boxed set coming out in 2005, which will include, Starting a Collection Agency, The Squeaky Wheel, and a book of collection letters and forms. Dunn publishes her own books through her publishing company, Never Dunn Publishing LLC.

Michelle opened and ran her own very successful collection agency for 8 years. She has over 17 years experience in debt collection. To sign up for Michelle’s FREE online networking group visit www.credit-and-collections.com . Get FREE forms and tips for starting your own agency.

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COMING SOON! Become the Squeaky Wheel!

FREE with your pre-order and payment! ORDER NOW!!

COLLECTING PAST DUE ACCOUNTS: Letting a Call Get Personal

Collection Tips

Easy Credit Forms for Businesses

How To Collect Your Healthcare Receivables

PREDICTING POTENTIAL COLLECTION PROBLEMS

COLLECTION SCHEDULES AND PAYMENT ARRANGEMENTS

WHAT NOW?

DOING IT YOURSELF

Telephone Collection Tips

Why will my customer pay a collection agency if they wont pay me??

What Works in Collections

What if I receive a bad check?

Top 7 reasons to use a Collection Service

Prevent Bad Check Losses!

Should I Send One More Letter?

How to Choose a Professional Collection Agency

SHOULD I START MY OWN COLLECTION AGENCY?

COMING SOON!
Become the Squeaky Wheel!

FREE with your pre-order and payment!
ORDER NOW!!