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

©2000 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.

Michelle Dunn started and successfully ran M.A.D. Collection Agency for 8 years, and has received wide press with articles appearing in Ladies Home Journal, PC World, and many other magazines and newspapers. Michelle owns and operates www.Credit-and-Collections.com (an online professional collections community for networking and discussions) and Never Dunn Publishing, LLC.

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