Running a small business is no easy task. You are overseeing multiple operations, managing a team of employees, trying to keep your customers happy, and pursuing clients who conveniently forget to pay you. The compounding impact of unpaid invoices can be extremely bad for your cash flow and even threaten the very survival of everything you have built.
Sure, you can make it your own responsibility to reach out to your non-paying client yourself, but is that really the best use of your time? An experienced collection agency in Dallas can take that burden from your shoulders.
You should also remember that if you are not familiar with the debt collection terminology, you are walking into a very complicated situation without a clue about how it works. Learn the terms and the process, and let a professional collection agency manage your debt recovery.
Let’s start with a term you have probably heard before — “accounts receivable.” This is the money you are owed for products or services that you have already provided. In other words, it represents the sales that you have made but for which you have not been paid yet.
If these accounts stay unpaid for too long, they may eventually be classified as “bad debt,” which just means that you probably will never see that money again. It is rare to recover bad debt, so you might just have to write it off as a loss.
When hiring a debt collection agency for small business, you will also hear the term “contingency fee” tossed around. This is an arrangement where the agency only gets paid if they manage to recover money for you, and their fee is usually a percentage of what they collect. Many small business owners like this payment model since it means the agency only gets paid when they actually bring in money, which takes some of the financial pressure off the business owner.
Another term you need to know is “Fair Debt Collection Practices Act (FDCPA)”. Enacted in 1977, this federal law protects debtors from unethical collection practices while outlining what collectors can and can’t do. For example, the FDCPA prohibits behaviors such as harassment, using false statements, or engaging in any unfair practice that could exploit or coerce debtors. If your chosen collection agency complies with FDCPA standards, they are likely doing things the right way.
There is also the “aging report,” which categorizes unpaid accounts by how long they have been overdue. Checking this report can help you see which clients are in genuine financial trouble and which ones are just plain dodging you. Likewise, getting your head around terms like “past due” and “token payments” can clue you in on when a client might need some urgent help with their finances.
If your business is struggling with unpaid invoices and chasing debt is taking too much of your time, reach out to Williams, Rush & Associates LLC. Our experienced team is all too familiar with the challenges small businesses face, and we are here to help you recover what you are owed quickly and ethically. Contact us today to learn more about our services and how we can make debt recovery stress-free for you.