What Really Counts When Collecting Payments

• June 17, 2009
• by ServeNow.com Staff
• Business Tips

While the economy continues to decline, most process serving and investigation companies have retained a steady influx of work. Yet, there are still areas of the business that have been faced with difficulties related to the economy. For process servers and private investigators alike, a crucial element of staying ahead in business is knowing when and how to collect on payments.

Communication Tactics

By implementing payment terms in the initial stages of communication with clients, you will help ensure an easy transaction. After initial contact is made with a potential client, provide them with a contract of terms and agreements established by your company. Outline a clear procedure that details a payment policy, service structure, and late fee consequences to help guarantee prompt payment. Include specific details, such as late fee obligations, to further demonstrate your rules and guidelines. If payment problems still ensue, many of the questions and concerns regarding payment will not be debatable because you have an established company policy.

Prepayment Policies

Many process servers are now collecting payments up front. Similar business practices are shared among private investigators, who also opt for an initial payment or require a retainer. Prepayments should always be in accordance with up-front, honest and open communication between a client and process server. Paula Ashcraft of ProVest, LLC says, “Establish clear payment requirements when the client contacts you regarding a job. Put it in writing and use up-front communication to clarify what your requirements are. You should not accept a job unless it is paid.”

Prepayment can be one of the most valuable policies a company can have to prevent collections. Ashcraft explains, “It has become a policy that if it is someone we haven’t done business with before, we require prepayments. If it is a rush job, we will accept a credit card.”

Many process serving companies are now facing difficulties when collecting on monthly payments from clients they have retained from the beginning. Ashcraft states, “There are folks that fall into the category of having been grandfathered in, but their clients aren’t paying them, so it is trickling down. Everyone is sort of holding on to the cash they have and it trickles down to the vendors.” This behavior is encouraging process servers and investigators to adopt prepayment policies.

Collection Procedures

The strain on payment collection can be felt across the board. Not only have process servers and private investigators been affected, but collection attorneys are now feeling the crunch as well. Collection attorneys serve at the forefront of managing the debt collection from the consumer. Robert Markoff, President of the National Association of Retail Collection Attorneys and a collection attorney at Markoff & Krasny in Chicago tells us, “There are always challenges, but the challenges have become greater.”

Markoff also states, “Not paying debt has always had an unpleasant result. By having consequences we encourage people to pay debts. If there were no consequences, why would anyone pay on debts other than moral feelings, but after awhile those only go so far.” In this case, consequences can prove to be quite costly and damaging to those in debt with the garnishing of wages and bank accounts, foreclosures on homes, or selling of assets owned by the consumer.

Consequences can be implemented by each process serving or investigation business. One example of dealing with late payments includes sending an overdue notice for 30 days, adding interest to the bill at 60 days, and sending the client to a collection agency at 90 days.

When dealing with debt collection, remember to maintain a positive and professional attitude. Make sure that you have identified the correct point of contact, i.e. the accountant or bookkeeper, to ensure collection in a timely manner. Stay focused on the issue at hand to maintain control of the conversation. Attempt to arrive at a precise payment commitment so the debt collection is geared toward a productive result for both parties. Retain detailed notes and records of attempts to collect on payments. These notes will be a valuable source for subsequent phone calls or litigation purposes.

If persistent problems continue to arise, assistance with debt collection may be pursued through avenues such as an accredited association, a collection attorney or local collection agencies. For example, associations may serve as a forum to file a complaint or can help to mediate the situation at hand. However, even as a last resort, involving third parties can become costly and time-consuming.

When clear and concise payment arrangements are established upfront and constant direct communication is maintained, continual problems on collection can be minimized. While the economy is an added stress to businesses across the country, now is the time to promote open communication with clients, implement a prepayment policy and utilize local or national associations and tools to work toward keeping the industry moving forward.

Collection Tips

• Develop a firm payment policy that best suits your company
• It is beneficial to implement an upfront payment method
• Openly communicate your payment policy with new clients
• Make contact with the accountant or bookkeeper
• Immediately contact clients to notify them payments are overdue
• Maintain detailed notes on collection attempts
• If payments are not honored, seek help through associations, collection attorneys or agencies
• Don’t accept further work from a client who is past due on payments

Do you have successful collection tactics that work for your company? Tell us below!