If a commercial account goes unpaid for an extended period of time, there will come a point when the business doing the billing takes additional action to recover the money. The delinquent account is put in collections. An account placed in collections has the potential to be paid in full, partially, or not at all.
The question is when to place an account in collection.
When to Shift Unpaid Accounts to Collection
The age of the account is the primary determinant as to whether the account should be placed in collections. In general, the rate of financial recovery for an account that is a couple of months delinquent is significantly higher for an account that is one or several years old. Therefore, it makes sense to place certain accounts in collections at specific points in time.
Though similar collection efforts are conducted for accounts of different ages, the rate of financial recovery for an account that is older is understandably lower.
How to Decide When to Lean on Professional Debt Collectors
Moving an account to collections occurs after several attempts to collect the debt. The question is how long your business is willing to pursue the debt. Some businesses give commercial accounts an entire year or longer before shifting them to collections. Other businesses move accounts to collections in six months or less. Take a close look at the statistics pertaining to your business’s unpaid accounts receivable bills, and you will likely find a trend in the timing of payments.
Crunch the numbers on your company’s unpaid accounts, get a general sense of when those who have failed to pay their bills tend to pay after receiving correspondence and move forward accordingly.
Be Decisive and Take Action
Be proactive, lean toward placing your unpaid commercial debt accounts in collection sooner rather than later, and rest easy knowing you have done your part to expedite the recovery of your company’s hard-earned money. Moving forward, consider conducting commercial background checks before providing services or products, and you’ll reduce the chances of yet another account ending up in collections.