Commercial Collections Services are ways of effectively collecting on non-collateralized debt. Commercial lenders and businesses are getting paid with Dedicated Commercial Recovery’s assistance and expertise in Commercial equipment finance and leasing, merchant cash advance and working capital, commercial property lease collections, unpaid purchase order collections, balances owed for security and janitorial services, and more. If you’re owed money for your business services, we’ll make sure you get it.
When you work with Dedicated CRI you’ll work first hand with professional accomplished collection experts. Our proprietary commercial collections methods and we personalize the business collections approach to make recovery simple and seamless. Dedicated’s professional organization of skilled and trained negotiators are an extension agent of your company- to effectively collect commercial invoices. We help business owners and credit managers get results quickly and cost effectively.
Commercial Collections Services from Dedicated CRI’s professionals help businesses manage the market’s ups and downs
Step 1 – Have a Collections Plan in Place
Recently, I met a member of the NEFA who shares our view that preparation for future collections is essential. He is the owner of a company that is fairly young by industry standards. Up until recently, they were not experiencing many charge-offs, or even late payments, however, he insisted on meeting with me to set up a process for future delinquencies. By preparing his company in advance, he is now ready for any of the market’s ups and downs. They have a predictable process in place they can use and adjust to fit to their changing needs. His recent comment to me was, by having a collections plan in place even makes him feel more comfortable when funding.
Step 2 – Recognize the Power of Due Diligence for Setting up New Accounts
In this time of plenty, don’t forget your due diligence. While, it can be tempting to push all of the deals through because you might feel you are missing out. Don’t let this thought process take over; work smarter not harder. One major issue exists when companies do not adequately research a company as a new account. Have personal guarantors and references been set up? Don’t rush into a new sale for an account without due diligence.
Commercial collection’s services should follow normal underwriting guidelines. For example, when not following this practice includes taking shortcuts, or pushing guarantors or companies through on a “gut feeling.” Or not following any other means of getting approval that may fall outside your normal underwriting guidelines. Since you may only fund A and B credit types, don’t start pushing through B- or C credits. Ask yourself: are we trained and prepared on how to deal with higher credit risks? Have we developed a plan to actively monitor these types of accounts? You have been successful by being who you are, don’t let the current sales increase sway you into becoming something you are not.
Step 3 – Manage Customer Payments
Most of all businesses want customers to pay bills on time. Allowing customers to consistently pay late, or to be “behind” for long periods of time with a litany of excuses is the opposite of what most businesses want: I have a family emergency… I lost a contract I was counting on… The equipment is inoperable and the vendor will not work with me… My business is seasonal… etc. We have all heard these excuses. For the most part, any time you hear phrases like these, it is a stall tactic.
There’s a classic saying in the collection’s industry: “If their lips are moving, they are lying.” The more you allow these excuses to become acceptable, the slower they will pay. And what do slow payers become? That’s right- unfortunately, a large percentage of them become charged-off accounts. Keep their feet to the fire, make sure they understand repayment of this account is vital to you and to them. Help them to understand paying slowly directly affects their ability to get future funding from you or other lenders, and how it can affect any future flexibility on your end.
Step 4 – Proactively Manage Delinquent Accounts
What happens when you hang on too long at the end: Think about that feeling you get when you know an account is heading for a charge-off. If you are honest with yourself, that feeling comes much sooner than the actual event that finalizes it. It could be a final broken promise, a “heads up” call from the original vendor, receiving word from one or more of the Personal Guarantors that the business is closing or they want out of this obligation, and so on. It seems like the longer you allow this account to be delinquent, the less collectible it becomes, statistically speaking. I know that sounds like a quote from “Captain Obvious,” but it is the plain truth.
It surprises me how often we receive accounts that are 180+ days behind prior to charge-off, and then after charge-off were not worked again for many months or years. While I question this with our clients, they usually say they have internal collectors who work the accounts to death. Or there was “no meat left on the bone.” However, when an account goes into collections, it changes the delinquent party’s whole perspective. Take this as a positive. Generally, there is nothing you or your internal collectors are doing wrong- it’s simply that calls from collection agencies make people and companies uncomfortable. I have yet to meet a person who looks forward to a third-party collection call.
Step 5 – Avoid Jumping into Court for your Commercial Collections Services
If you are rushing to judgments; you may be missing a crucial and more cost-effective step. What can be even worse than procrastination is the idea if delinquent customers don’t pay, then your only choice is to sue. Yet when pursuing this tactic there are usually significant up-front fees, large hourly rates which add up quickly, and in the end, what do you truly have? A piece of paper that says the delinquent customer owes you, and possibly a large bill to pay yourself.
Judgments do not guarantee payment; it simply means that the courts recognize this is a valid and owing debt. While the reality of the situation still requires collecting the money. Due to this realization, many of our clients have chosen to stop the “Rush to Judgment” practice on our recommendation.
There are judgments that work, and sometimes you can seize existing assets. This sounds great to a lender, but the truth is that all too often it is difficult to collect on judgments and many go unpaid. According to the National Judgment Network, 80% of all court judgment awards go uncollected. While some sources even state that number could be over 90%. Once the delinquent party realizes no one is compelling them, they rarely pay anything willingly. Therefore, with so many jurisdictional differences, asset seizures or levies can be difficult, expensive and complicated.