You have money...go get it

Small businesses work so hard at trying to keep their cash or make more of it...stop (just for a moment). Before you spend another nickel chasing new business, collect what you already made. Too often, especially in this economic climate, small businesses leave money on the table or, even worse, in the trash. If you're not getting paid for your services, you are working for NOTHING. Now more than ever, it's time to be aggressive about your accounts receivable. FYI - don't chase your tail, just get organized.

1. Identify all debt which is between two and three cycles based on your own terms. (e.g. if you extend 30 days credit...between 60 and 90 days; if you extend 15 days credit...between 30 and 45 days; etc.). Send those clients a friendly reminder and subtle threat..."maybe you forgot", "perhaps you were not aware", "if you do not respond, I may have to refer this account to a professional collection agency".

2. Send all accounts receivables over three cycles to a professional (reputable) collection agency. There is a direct relationship between the age of placement and liquidity. Don't waste your time and resources on collecting bad debt on your own. The collection agency fee (should be between 25 and 33%) is less than the money you would spend on your own and they're far more effective.

Not only will you take "cash out of your waste basket", but you will also be reminding old customers of your services...any advertising is good advertising.

Here are a few things to watch out for with collection agencies: If they're too big, your accounts get lost in the process and you, and your clients, get little to no personal service; If they're a "mom and pop" operation, you will miss out on the latest systemic collection tools and they tend to be very localized (each state requires a separate collection license); Make sure you can talk to the owner/manager of the agency to assess their collection approach because you want someone who has practical collection philosophy; don't get lured by attractive fees...rate of return beats fees any day; keep your agency honest by making sure they are meeting industry standards (if placements are timely, agency should collect 25%...and less means your debt was not placed in a timely manner or the agency is failing...any more than 25% means you are not doing a good job with current receivables); finally, remember it's your money, so make sure the agency will work for you.

There are many very good collection agencies, but here's are a couple of nationwide agencies (not too big) with good reviews and track records.

ACSI - Revenue Management (http://www.acsi-collections.com/about.htm) 1-800-236-5783 - Second generation family business that has developed into a nation wide agency. Excellent personal service, comprehensive services, advanced collection system, and outstanding results. On their website, they list a consulting fee...don't pay it. Ask them to waive the fee and you will only have to pay a fee when they collect...and they will. They're good.

Rapid Recovery (http://www.rapidrecovery.com/about.htm) 1-866-731-2251 - Fairly new to the game (13 years), but growing fast. Just like ACSI, excellent personal service, comprehensive services, advanced collection system, and outstanding results. Their fees are high, but I was told they are negotiable (sign of immaturity), but you might be able to get a good fees (25 to 30%). Recovery rate is not as good as above, but 3 or 4 % points lower fees make Raid a viable alternative.


Good luck and MAKE THEM PAY!!!