When to Place Accounts for Collection

Creditors often ask, “When should I place an account with a accounts receivable recovery specialist?” 

Most creditors tend to look to a specific receivable age when placing an account.  Generally, if an account is 90 days or older, a creditor should initiate placement with a collection agency, especially if an unsuitable response has been received from the debtor.

At that point, most creditors have sent out several statements and letters, and made collection calls.  Most have tried to move the debtor toward satisfying their account responsibility.  The debtor’s lack of response, or an unsuitable response, to collection calls and letters —  indicates a lack of concern or a cash flow problem.

In either case, an accounts receivable problem exists, and the account should be placed immediately.


General Guidelines For Placing Accounts

    • Two or more broken promises of payment.  This might include promises-to-pay, but no checks or other payments have been received, and the debtor will not send immediate payment by overnight delivery.
    • The debtor repeatedly requests documentation even though they have been supplied the documentation.  This is a common practice used to delay account payment.
    • The debtor’s phone/fax is disconnected.  Check your records for alternate numbers, check directory assistance, and if no new number can be obtained place the account immediately.
    • The debtor states that they will not follow your terms of sale.  Perhaps they say that they pay bills in sixty or ninety days.  If you did not have an agreement with the debtor for extended terms, this is obviously a delaying tactic.  Be sure to explain to your debtor the terms of sale and request immediate payment.  If they refuse or fail to pay as promised, place the account immediately.
    • Your debtor indicates an inability to pay, either by failing to establish a realistic payment schedule or refuses to provide a specific date for payment.  This indicates a cash flow problem and steps should immediately be undertaken.
    • The debtor indicates that they will “take care of the account,” but refuses to make a solid, realistic commitment for the payment or to establish a payment schedule.
    • Your debtor suddenly indicates a dispute regarding the product/merchandise shipped, or your terms of sale.  Such a dispute was not raised previously, and seems to be conveniently timed.  If the investigation proves the dispute is without merit and the debtor will not take steps to make payment or resolve the matter, the account should be placed for collection.

Start seeing the dollars you have earned today — contact Cash Flow Management, Inc. for professional, prompt, low-cost results.