Hey Thea,
We are a small business and have found engaging a collection agency to be time consuming and not cost effective. Do you have any suggestions on how to collect? We have one customer in particular—he purchased $5,000 from us on his account and since has not made any effort to make a dent in that bill. We have suspended his charging privileges and sent reminders and made calls. He also gets a monthly statement. He still comes in occasionally and always pays cash for purchases, usually less than $100. HELP!
— Good Account Gone Bad
Dear Gone Bad,
The love/hate relationship with collection agencies rages on for most of us. I know exactly where you are coming from and was firmly in your camp until I had the pleasure (if you could call it that) of getting to know some really good ones. Interview several agency representatives and see who you click with. The new breed of agencies is refreshing. I understand the frustration. I am not patient, don’t want to “calendar” anything for 60 days or have to dog someone to tell me what the heck is going on and next steps. Just hit me with the 411. If it is not collectible, then just tell me I am up a creek. Those serving it straight are the ones I connect with.
An option to consider: small claims court. I LOVE a good rodeo and small claims court fits the bill. The limit in your state appears to be $3,500, so you would have to cap the amount you sue for, which takes $1,500 off the top but gets you to court quick, and serving him with a lawsuit will get his attention. When you consider that a collection agency charges approximately 25% to collect without filing suit and civil litigation is not realistic for that amount, shaving some debt makes sense.
The added bonus, if you have never been to small claims court, it is a killer experience. Typically, once your bad actor gets served, they reach out to “see what they can work out” or tell you why this is not cool. The amount of pushback they spew is a true work of art. A word of caution: Don’t release the suit without getting paid. I mean cold hard cash. Payment clears the bank. No need to pretend. We have already established the level of trust.
You mentioned he comes in occasionally. Let the team know to give you a heads up next time Mr. Wonderful strolls up to the counter, then hotfoot it over and engage in a convo about his account. It doesn’t have to be public; ask if you can a step away from the counter. Then it’s game on. You can be open about having to “take some next steps on the account. If we can’t get a deal done, we have to move the account along.”
Tell him, “While we are at it, Big Shot, we are a ‘no-go’ on those cash purchases.” You are at a defining moment in your relationship. We go to next steps (court, collections) or we work it out. And by work it out, I mean you get some money right there on the spot. A good faith payment, no matter how small, at least shows intent. There is no waiting to see if he does the right thing. He already told you in a nonverbal way, he is not worried about you or your debt.
You don’t get to dine and dash then show up and pay for coffee. For your good account gone bad, practice tough love.
