Using Collection Agencies to Manage Aging Debt

Every business has accounts receivables. Many have a cutoff point for debt that is owed. Most companies I know of now are turning over any debts that go beyond 90 days to a collection agency. However, you do want to have a relationship with a collection agency that actually has a record of being able to collect on those accounts. I was looking at the Professional Recovery Consultants reviews to see how they did as compare to other agencies that collect on accounts receivable that have gone beyond a certain length of time.

Debt owed can be a problem for companies that rely on a steady cash stream and narrow margins. That is us. We take care of our customers, but we also need our customers to take care of us by paying on time. Our business model is evolving to more of a pay before receiving process, but we still have a large number of legacy clients that receive services then pay. Some of them on occasion default for longer than 90 days on payments they owe us. Hiring a professional debt collection agency is necessary. We have to show action on the accounts by us for our tax purposes and for the purposes of investors.

Years ago we had some accounts that were like perpetual noncollectable accounts receivable. It skewed the books. They showed as money owed us, but it was money we would likely never be able to collect. We began to follow the trend of offloading debt owed to us that hit the 90 day mark. If a client does not pay anything by then, it is unlikely you will ever receive anything. The only rare difference were clients who got delayed paying us because of their inability to collect what was owed to them. Since we are a raw materials supplier who sells to manufacturers who sell to retailers, that happened more often with us than you might imagine.

Our books are good now. All 90 day and older debt is sold off for collection. We receive a little bit on the dollar for each past due account and receive a percentage of what is collected. We clear our books and move on to newer clients. Hey, it is how business is done today. Might not be ideal, but it is how it is done.