Why Collect Your Own Debt?
Collecting the money that is owed to your organization, in this day and age, is more important than ever. With the economy spiraling, more and more debt is piling up. The winners will be the third-party collection firms that will eventually recover your money, and that will be for a substantial fee.
Over my twenty years as a credit manager and recovery specialist, I have developed unique ways in which I investigate prospective credit risks. A thorough pre-investigative routine is the key to minimizing risk. I will outline the techniques I’ve developed to help you profile the risk and assist you in determining whether or not the risk is acceptable. These research avenues are free and available to anyone who simply knows where to look. I have been able to balance the line between growth in customer base while minimizing the delinquencies on the aging reports. Being too liberal in granting credit looks good on paper initially; being too conservative restricts growth.
I have also become quite adept at recovering money in the third-party collection industry. When dealing with an individual versus an organization, different tactics are needed. More importantly, the psychological foundation of that individual is the key to getting him to pay you. I have discovered ways that allow me to become a major obstacle in the life of a person who owes money to my clients. I have developed a step-by-step process that yields a tremendous amount of recovered debt. All of the techniques are legal as well.
Collection firms are bound by the FDCPA (Fair Debt Collection Practices Act) and are limited to certain laws that govern how they collect your money. They are still extremely successful at generating revenue, but the key here is that a business or corporation is not governed by these laws because it is not a third party when it collects its own debt. This gives the original creditor and its accounts receivable staff more opportunity to achieve successful debt collection rather than pay a collection firm to do it.
Face it: I made more money on the third-party end because I was compensated on a percentage of the recovery rather than as a salaried in-house accounts receivable manager. As an individual became more effective at recovering money, the earning potential was unlimited. It didn’t take me long to figure out that if I was going to be stuck behind a desk all day doing this job, I needed to make sure that the rewards were there. I will outline these techniques and help you avoid paying substantial fees to an expert. These same techniques will help people working in the third-party collection industry become more successful as well.
In this article I will concentrate on an existing debt that is owed. Whether you are the original creditor or a third party collector, the approach is the same. In the land of automatic dialing systems and impersonal collection calls, companies utilize volume bombardment to yield recoveries. The problem with this type of approach is that there is nothing to separate you from any other debt collector that is contacting the person who owes money. It’s easy to avoid the automated calls and form letters. They don’t initiate any urgency, which is the key element when attempting to collect your money.
When I initially receive an account I investigate the individual. This also is important when collecting business debt in-house because ultimately there is one individual who is responsible for the accounts payable, and that’s the owner. When investigating a business, no matter what state, you can find the Secretary of State listing online that will give you the owner’s name, or better yet, the attorney for the company. These listings have valuable information ranging from the Statutory Agent's name and address--which is oftentimes the home address--as well as any other liens that have been filed against him.
To go one step further, I take that owner's name and run it through the county's Clerk of Courts civil listings to build a character profile of that individual. This information often lists the individual’s judgments that have been levied against him personally. They are listed by date as well, and you can determine whether or not this person’s indebtedness is a recent occurrence or relating to circumstances in the past. I then check county property records to see if this individual owns property, or more than one, and check values. It’s a good indicator of how that individual is living even though he isn't paying you. I then use search engines to obtain any other useful information to help me build a profile of this individual. It is amazing the amount of imformation you can find on any business, including the smaller ones. There are companies that charge fees for some of this research like Dun & Bradstreet, but the fees are on the high side and you don’t always get a complete profile of the business. This organization does not list each debt they carry, and businesses will often pay those creditors that report to Dun & Bradstreet in an effort portray credit worthiness. Unfortunately some smaller companies that are owed money can't afford the membership fees to list their debt so they are hidden from credit managers when evaluating them.
Image Credit: Wikimedia Commons, Dollar Sign by John Sauter
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