Collecting past due accounts is likely not on your list of favorite business activities. However, when your client accounts begin to become past due, it is important to handle the situation as quickly as possible. Early intervention is a smart strategy for effective debt collection.
As debt recovery methods and tactics continue to evolve, businesses have been adopting new and more efficient ways to recover bad debt and manage accounts receivables. They are effectively achieving this with the use of early intervention practices.
The changes put in place by the Telephone Consumer Protection Act (TCPA) and Consumer Financial Protection Bureau (CFPB) guidelines also continue to impact the accounts receivable landscape.
Changing Of The Times
Many accounts receivables teams have begun to phase out traditional internal and external debt recovery methods in an effort to effectively reduce delinquency and maximize recovery and performance on bad debt. It’s not uncommon for businesses to now focus on accounts between 5 and 7 days past due. Early-stage collections may take place for an account anywhere between 1 to 5 days of their final notice.
By working with an effective debt collection agency such as Rocket Receivables, businesses are now focusing their attention on their collection timelines and utilizing early intervention practices to speed up their debt recovery for past due accounts.
Benefits of Early Intervention
When businesses adopt an early intervention debt collection approach, historically, they tend to receive a significant lift. They can achieve this by evaluating credit history to determine potential risks, creating detailed account segmentation, and developing control group methods to ascertain net lift.
There are customers who will settle their debt without the need for any debt recovery treatment. Unfortunately, there are many accounts that will remain in the red if no contact is made. This is where account segmentation can be beneficial as it allows companies to highlight and increase recovery from higher-risk customers.
Balancing Debt Collections and Customer Relationships
Adopting a quicker timeline for debt collection can have a positive impact on relationships with customers and also overall customer satisfaction. A lot of customers appreciate a business reaching out and reminding them of current or delinquent payments.
An early intervention debt collection approach not only benefits the business in getting what it’s owed, but it also protects the customer from receiving a negative impact on their credit history. Also, it’s not uncommon for customers to be unaware of a past due obligation. Therefore, they can appreciate a courtesy reminder to correct the obligation as opposed to not being made aware of it for months.
How Rocket Receivables Can Help
There are many benefits early debt recovery intervention programs can provide businesses. Most companies will have active and inactive customers and as a result, an early and effective treatment strategy is needed. This is where Rocket Receivables’ Stage One debt collection service can step in and take control. Stage One uses diplomatic demand letters in both your name (first-party collections) and ours (third-party collections) to serve as an effective reminder of payments owed. Once the account is paid, we send out a complimentary “Thank You” letter on your behalf.
If you need to use this service and get an early start on past due accounts, then we invite you to buy now, and let us get you what you’re owed, while also protecting your customer relationships.