Sooner or later it’s going to happen. You’ve followed the book on best credit management practices and used a fine tooth comb to select your customers. But it's the nature of the beast, the law of averages – whatever you choose to call it; some accounts are going to end up past due. And you're going to have to call on a professional to help you collect.

So you hand the account off. It's up to the agency now. You've done all you can. Right? Maybe.

According to the ABC-Amega third-party collection experts we talked to, there's plenty you can do to stack the deck in favor of getting the money you're owed.

Here are nine suggestions from the pros.

#1 Submit Claims Early

The #1 factor affecting collectability of delinquent receivables placed with a collection agency is the age of the account when placed. And, interestingly enough, the #1 mistake creditors make on past due accounts is waiting too long before placing them.

When an account has hit 90 days past due, sometimes even sooner, the creditor has lost leverage and it's time for third party intervention. The longer you wait, the more likely the debtor will go out of business, file bankruptcy, or simply disappear. Your options at that point become extremely limited.

As soon as a customer stops paying on time, suspend further shipments and begin your own collection efforts. If the customer hasn’t paid or set-up a payment plan by 60-90 days past due, it’s time to place the account with a collection agency.

#2 Submit Collection Accounts to the Claim Submission Desk

Once you’ve decided to submit an account to a third party, you want them to get going as soon as possible. (Remember, Step 1. Time is a critical factor.) The quickest way to get your claim entered into the agency's collection system is to submit it to the right place – claim submission. Not to the collector, not to customer service. Why is this so important?

Every collection agency has administrative staff standing by to see that new claims get into their system quickly. This is the person you want your claim to go to first. Sending it to someone else absolutely guarantees it will be delayed, or even lost.

You understand how these things go. If you submit your claim to the wrong person a number of things could happen, most of them not helpful to your getting payment on that past due account. Your claim could sit in an e-mail inbox for days (if the person is out of the office) before it’s forwarded it to the claim submission desk. A faxed claim could end up in a pile of faxes related to current collection accounts, and discovered a day (or more) later, when the collector finally gets through their correspondence.

To kick-start the handling of your account, it's absolutely essential that you follow your agency's instructions about how to submit new claims.

#3 Provide Complete Documentation and Information at Placement

Here again, time is of the essence. While ABC-Amega can start working a claim with just the debtor contact information and amount owed, collectors usually need documentation to enforce or validate their demands on the debtor. Collection efforts are much more effective, and efficient, if we have a full understanding of the details of the claim up-front.

Send everything you have that helps to substantiate the debt, that provides insight into your relationship with the debtor, and that can improve the collectability of the account. Here's a listing of information that, if submitted up-front, can reduce collection time by weeks, and greatly improve your chances of getting paid:

Clear and concise Statement of Account	Summary of in-house collection efforts; status of account when placed
Accurate and complete debtor information	Legal name of the debtor
Copies of invoices, purchase orders	Copies of credit application, contract
Copy of signed personal guarantee	Any correspondence (letters, faxes, emails) from the debtor admitting to the debt
Bills of lading, bills of exchange	Proof of delivery

In order to be sure you always have complete documentation available, be proactive and protect your interests. Handle every sale as if it might turn into a collection account by fully documenting each step in the transaction, and saving all relevant correspondence between you and your buyer.

#4 Do Not Talk to the Debtor Once You’ve Placed the Account

It's possible that, as soon as the debtor receives our collection demand letter, he'll contact you to try to convince you to give him more time or accept a compromise. Don’t go there. If you’ve resorted to placing the account with a third party, you’ve already given the debtor more than enough time to pay. Speaking with him again just gives him an opportunity to play you off against your own representative. The outcome usually is that you end up with less money.

Follow the advice of the Credit Research Foundation (CRF):

“Unless there is a good reason for you to become involved (i.e. a return of merchandise or a valid claim that reduces the amount owing and you issue a credit memo), do not interfere with the process between your customer and the agency. You hired the agency, so let them dotheir job.”

The CRF also recommends that you send any check payment received from the debtor after the free demand period to the collection agency, rather than cashing it. “Let the agency determine if any restricted endorsements make the check useless.”

#5 Keep the Collector Up to Date on Any New Information

If you receive a payment, let the collector know. If she calls the debtor with inaccurate information, it will only increase the debtor’s frustration level, making him more reluctant to cooperate.

If you find out the debtor has moved, filed bankruptcy, sold off to another company, etc. it's essential that the collection agency gets this information as soon as possible. Time is the enemy in debt collection. The sooner the collector has the information, the sooner it can be acted upon, increasing the likelihood of success.

#6 Don't Micromanage the Account

Give your agency time to do its job and get back to you. If they suggest advancing your file 15, 30 or 45 days, there is a reason. The more time the collector has to spend answering unnecessary requests for information, the less time there is to actually work on collecting your account.

It will also be helpful if you don't require “routine” reports on files. Allow the collector to do his primary job – collecting – and expect reports only when there's a new development or something significant.

This doesn't mean you shouldn't try to stay on top of the agency's efforts. We work for you, not the other way around. However, most national agencies now provide clients access to account status via the Internet, so you'll often have the ability to check on the status of a file yourself. Take advantage of this option to make your job easier, as well as the collector's.

#7 Respond ASAP to Agency Requests for Information or Authorization

Again, time is not on your side. At ABC-Amega, we've seen many instances where delayed responses from creditors have closed a window of opportunity to collect. Many files actually end up being written off as uncollectable simply because we haven't received the information we needed from the client.

#8 If You Decide to Sue, Keep Up Your End of the Bargain

U.S. lawsuits take time, sometimes a very long time. According to the Credit Research Foundation: “If you decide to proceed with a suit, be prepared to pay additional costs, and to wait a long time for a resolution. Some [U.S.] state civil courts have cases backed up months, and sometimes years. You can expect your customer’s attorney to use delaying tactics, and put as many legal roadblocks in your way as possible.”

In our experience, lawsuits in any jurisdiction are slow going. If you decide to sue, expect there to be a long period of time during which the collector won’t have anything to report.

Then, if your case ends up going to trial (most are settled out of court), hold up your end by sending the required witness(es) to the hearing. If you don’t, the judge can take punitive action against the collection attorney. In fact, one of ABC-Amega’s attorneys was fined because our client failed to show for three consecutive hearings in a lawsuit the client had authorized. And, if you don't send the witnesses, you won't win your case.

#9 Trust Your Agency

The most important bit of advice we have is to trust your receivable management firm. If you’ve chosen a highly recommended, reputable company, with years of experience, you can count on the fact that they will represent you honestly and professionally. Once you’ve placed your receivable in their hands, support their efforts. Remember you are partners, working toward the same goal. It's just as important to them to collect your account as it is to you.

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Citations attributed to the Credit Research Foundation are taken from the article “Choosing and Dealing with Collection Agencies and Attorneys” found in the CRF Credit Assistant under Collection Procedures.

This information is provided by ABC-Amega Inc. -- providing 1st and 3rd party commercial collection services since 1929, and collecting in more than 200 countries worldwide. For further information, contact info@abc-amega.com.