The Don'ts of Business Debt Collection

There is a wealth of literature about collecting debts from late-paying clients. And while many of these tips have proven effective in recovering debts, business owners still need to be apprised on how not to collect payments, probably because most of the guidelines are common knowledge. Still, when they have exhausted all means to collect payments from late-paying customers, some are bound to commit costly mistakes in debt recovery efforts.

Owners of small and medium-scale businesses relying on payments to keep their operations and cash flow healthy should avoid the following mistakes in managing their accounts receivable:

• Incorporating additional fees or hiking up interest: Some business owners who have had enough of their delinquent customers slap on an additional fee or a higher interest, which they deem justifiable given the anxiety and stress they face chasing payments. However, doing so could just exacerbate the problem, with clients completely disregarding the penalties and the debt. It is best for business owners to adhere to their collection policies and terms no matter what.

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• Letting emotions get in the way: Business owners who tirelessly reach out to late-paying clients will at some point get frustrated. And when emotions run over, a host of new problems is likely to emerge. For example, a frustrated business owner who has to make the nth collection call could resort to threatening or harassing a client just to get payment. Doing so, however, could translate to legal woes that could be detrimental to the health of the business.

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• Waiting too long to contact a collection agency: If a business owner has exhausted all means to recover payment and still fails to collect, it is now time to hand over the responsibility to professionals. A collection agency like Brennan & Clark LLC can design a strategic plan that will maximize the chance of recovery.

Is your business plagued with delayed payments? Subscribe to this blog for more resources on the debt collection process.

Business Debt: Assessing The Need to File For Bankruptcy

Whether in using up credit lines or applying for bank loans, most businesses often incur debts as part of their operations. Not all companies, however, have to capacity to fulfill their obligations to their creditors.

This is the reality and sadly, many businesses file for bankruptcy as a means to redress their debts. Although bankruptcy can always be considered, it needs a lot of thought and effort on the part of the borrower to chip away financial obligations little by little.

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First, there is always a distinction among different kinds of debts. Some debts are held at much better esteem than others. That said, businesses should always reassess their financial standing with special focus on their credit standing vis-a-vis business performance.

For example, if current debt contributes to improved operations and therefore brings increased income, then filing for bankruptcy can be considered “premature” since the business is still earning from the debt incurred. Bankruptcy should be filed during hopeless cases, i.e., when debt has eliminated the income potential of the company.

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Although filing for bankruptcy may offer many advantages such as wiping out certain debts, it can also mean, depending on the contract, returning properties to the creditor. This rule is applicable to “secured debts” or loans such as car loans and mortgages, wherein personal property have been put up as collateral for unpaid loans.

Before filing for bankruptcy, financial obligations must be addressed in a strategic way. There are many options for restructuring debt or paying it off slowly. Companies that mediate for debt solutions between creditor and borrower could also be tapped.  

Brennan & Clark is a collection agency that offers customized receivables support solutions to businesses. Follow this Twitter account to learn more about the company.

Paying Off Medical Debt: On The Road to Health and Financial Recovery

Anyone who's been in debt knows how this difficult situation can take a toll on one's health because of the worry it can cause a person. And yet sadly, when it comes to racking up considerable debt, having to go to the hospital is one of the leading perpetrators. But before one allows the misery of debt get in the way of making a full recovery, it's worth looking at these tips for managing and paying of medical bills.

  

1)Take care of bills as soon as possible. Naturally, the best way to avoid going into serious debt is to take care of bills right away, especially as ignoring these can put a dent on one's credit score. Besides, it might be possible to bargain with the healthcare provider if done before the bill heads to the collections department.  

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2)Negotiate with the hospital. As mentioned earlier, it's quite possible to bargain with the hospital. Not too many people think to do so but approaching one's medical provider to negotiate for lower rates on medical procedures can be worth the effort. Some options to consider are asking for discounts, recommending an installment plan, or offering a down payment for a reduction on the bill.  

3)Understand the bill thoroughly. Considering the amount of items contained in a medical bill, it's not impossible that there may be overcharges tacked on to the bill so it's best to read each item closely to know if there are duplicates or charges that shouldn't be in the invoice.

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Understandably, there may be some item or procedure codes that patients might not easily comprehend. Don't be afraid to ask about these even if it means going through the entire bill.   

4)Look into assistance – financial or otherwise. There are many avenues for getting financial aid to pay for one's medical bills. Low-income individuals may qualify for Medicaid or assistance programs from the local government; similarly, there are state- and local-level insurance plans for children from lower income families. Nonprofits and even the hospital itself may also have programs that help reduce or completely pay off bills, but due diligence on the part of individual or family may be necessary as there aren't always advertised.

Meanwhile, credit counselors, medical billing advocates, and support groups can also provide invaluable help in managing and organizing debt repayment, finding information regarding financial aid, as well as resolving billing disputes.  

5)Think about filing for bankruptcy. A CNBC.com article reported that being unable to manage medical bills is the biggest reason for bankruptcy in the country. It can be a last ditch strategy as while filing for Chapter 7 bankruptcy can afford one a "clean slate," it can also mean a lower credit score. Besides which, not everyone is eligible for Chapter 7 bankruptcy, so it's best to weigh one's options and consult with an expert choosing this step.

For more on ideas on how to manage and pay off debt, subscribe to this Brennan & Clark blog.

Back to Basics: Simplifying the Debt Collection Process

In a bid to collect payments from clients, businesses devise ways that they believe will get results. However, many business owners still fail to collect what is due to them because their clients refuse to communicate with them or plainly ignore their pleas. When clients show no willingness to hand over payment, how should business owners respond?

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The solution, according to debt collection experts, is having a system in place for managing account receivables. Most of the time, entrepreneurs, especially small business owners, do not have a plan when it comes to collecting payments. Entrepreneurs tend to value their relationship with their clients, so some want to be as lenient as possible about payment terms and agreements. Such mindset, however, can severely affect their cash flow. 

From the start, business owners should be clear with their clients about their payment arrangement. Setting payment expectations and payment standards also allows business owners to be in control from the beginning. Before accepting a client, entrepreneurs should conduct a credit and background check. Business owners should also avoid extending payment terms for any client. A tracking system for all account receivables should be in place. Investing in an accounting software helps businesses manage finances. Moreover, such software can be programmed to set alerts for upcoming and late payments.

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In the end, consistency in business practices is key to an effective and smooth debt collection process. With an efficient collection strategy in place, entrepreneurs can concentrate on other important elements for the success of their business.

Follow this Brennan and Clark Facebook page for more tips on effectively managing your account receivables.

Climbing Out From the Depths of Being in Debt

Being in debt is an already-difficult situation that may also lead to issues like emotional distress and bad health, particularly when one worries about it constantly. So it's always in a person's best interest be on top of one's finances, although admittedly, sometimes taking loans and using credit can't be avoided. Fortunately, those who find themselves in debt don't have to stay there. Here are some tips for freeing one's self from debt:

Consciously resolve to get out of debt and follow through
Getting out of debt isn't easy; it requires commitment, discipline and lifestyle changes. Controlling one's spending is crucial to success. Avoid buying things on credit and pay with cash, and focus on paying off the debt before making any big purchases. Determining a realistic budget and sticking to it is useful too.

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Make a plan for payment
Faulty financial planning might have led to being so deep in debt, but this isn't irreversible. Making a record of what one owes and keeping track of one's cash flow and monthly expenses will enable one to make a plan for paying off the debt. Creating a schedule that shows when one's paycheck comes in, when bills are due, and what expenses are required is great way to see the bigger picture about when the debt could and should be paid off. With this, one may even determine whether it's necessary to earn extra income to accomplish the debt-clearing goal in a more timely manner.  

Keep an emergency fund in the bank
This is a good habit people should have even if they weren't in debt. Many people turn to their credit cards when they need to pay for something in a pinch. Having some money stowed away for unforeseen circumstances means one doesn't have to rely on a credit card so much.

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If it still seems daunting, seek help
Credit counselors like the National Foundation for Credit Counseling generally provide free counseling services where they can help people learn how to manage money and reduce their debt. They may also offer further assistance for debt restructuring and repayment where they negotiate with creditors to accept smaller payments or lower the interest on the debt. Getting out of debt may not be any easy road, but committing to the goal and following the recommendations above may get one closer to achieving freedom from these financial woes. Keep in mind, however, that even when one is in debt, it's still important to be treated according to one's rights, which are explained on credit.com.  

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Small Business Dilemma: When Big Firms Fail to Pay

In a tough economy, businesses do everything to survive. And one of the strategies they employ is keeping a tight rein on their expenses. Unfortunately, such measures push some companies to delay their payments, contradicting standard industry practices.

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At the height of the 2008 financial crisis, small businesses saw big companies scaling down their payments. But even with the economy picking up, commercial customers continue to pay their bills past due dates. Small businesses report that payments, especially from larger customers, stretch from 30 days to 60 days and even 90 days after an invoice has been issued. A 2012 survey meanwhile noted that businesses paid their bills an average of seven days past due.

Such practice puts small vendors at a difficult financial standing. Some have to dip into a line of credit just to keep their businesses running. Others have to write off uncollectible debts, eventually declaring them as expenses. Some small businesses have to turn away companies that continuously delay their payments, straining relations. Worse, some even have to close shop.

Delays in account receivable collections hurt businesses, especially small and medium enterprises that rely on such payments to continue operating. Although stalling payments to vendors may be a way to improve cash flow, commercial customers have to remember that part of doing good business is meeting their financial obligations to small firms that promptly delivered their requested products or services.

Brennan & Clark LLC’s mission goes beyond collections. The company works with clients in finding receivable support solutions that will best fit their needs. Learn more about the Better Business Bureau-accredited firm here.

REPOST: The Snowball Effect of Debt Repayment

Wouldn't it be great if there was a magic formula that will make you paid your debt in an instant? But the sad news is that, if you're waiting around to be rescued, you're probably not doing the very thing that will make a difference. Take responsibility for your own financial situation by reading the article below:

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You earned your degree, bought a new car, and went through a rough patch financially. Suddenly, you find yourself suffocating under a mountain of debt. According to recent reports, this scenario is becoming more commonplace as we value new, better and bigger things. But the snowball effect can help you pay off your debt quicker than you ever imagined. All it takes is a little time, planning and concentrated effort.

Snowball Effect?

What’s the best way to make a snowball? Start with a small ball of snow, and roll it through the yard. As you continue rolling, the snowball gets larger and larger until suddenly, it becomes a boulder. This is exactly how the snowball effect works when paying off debt. The goal is to tackle your smallest amount of debt, and continue rolling the extra money into your larger debts. Don’t worry about interest rates. Just focus on the debt amount.

Here’s how it works:

• Continue making the minimum payments on all your debts, minus the smallest one.
• Tackle the smallest debt with everything you have.
• Once that debt is paid off, take use money you were paying towards that debt, and roll it into your next smallest debt.
• Continue this cycle until you’ve paid off all your debt.

To make this work, there are a few things you’ll need to do.

1. Make a list of all your debts. Order them from smallest to largest.
2. Cut back and live simply until your debts are paid off. Remember, you want to avoid adding more debt to your plate. Otherwise, you’ll be stuck in the same vicious cycle.
3. Consider taking on another job or finding additional side work to help repay your debts.

Why the Snowball Effect Works

Some money experts recommend tackling debts with the highest interest rate or the largest debt first. But what happens with this method is you don’t see any progress; you don’t get that immediate satisfaction you crave.

If you were to tackle your largest debt first, you wouldn’t see progress for quite some time. After a while, you’ll lose steam and enthusiasm, and stop paying extra. But you’ll still have all your debts laying around.

When you start with your smallest debt, you’ll find that you’re able to pay it off relatively quickly. And once that’s paid off, you see progress. You get that much-needed satisfaction. The snowball effect works as a behavior modification tool, helping you reach smaller goals quickly.


For more articles about debt management, subscribe to this Brennan & Clark blog.

Assessing problems in business collections

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Collecting payments from clients isn’t always an easy task. There are times when the process is easy to manage, and there are times when delinquencies just start to pile up. During lean periods when the cash flow slows down, failure to collect money owed can lead to bigger problems in the future. Before issues pile up, it is best to assess the situation swiftly and to provide solutions as soon as possible. 


To start off, businesses should check their collection process. Delays in invoicing are all too common cause of delays in collecting receivables. Business owners need to ensure regularly that their internal systems are totally current at all times. With a little diligence in this task alone, it is possible to vastly improve an organization’s cash flow. 


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Second, business should also take time to review their communication methods. These days, diversifying and using more than one channel to send invoices has become an effective method to ensure that clients get the reminder they need to pay on time. 


Finally, managing expectations is necessary. Being upfront with expectations of prompt payment is vital to ensuring that the client pays on time. Slow payers, when compared to delinquents, are often those who remain unconvinced that obligations have to be paid promptly. Some companies also make the mistake of waiting too long before they insist on collecting payments. It sends a signal to clients that delayed payments are acceptable. 


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Other than problems within the business, it may also be a good idea to get in touch with clients to find out their reasons for delayed payments. Some clients may just have short-term problems that the business can help address, ensuring not just prompt payments but also a better customer relationship. 


Brennan and Clark is a leading commercial collections agency that goes beyond the usual process to provide receivables support solutions that eliminate credit losses. For more resources on improving the collections process, like this Facebook page.

Exposed: The truth about debt management myths

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Discussing debts can be very daunting. When a person starts underestimating how important debt management is, it can lead to more problems in the future and keep him from reaching his financial goals. Before things turn for the worse, a person should know what debt management is all about to dispel any assumptions he may have.


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Myth #1: Debt advice is not free. Most people are under the impression that they need to go to a debt management company that charges a fee if they need to ask for advice. This is not true as there are a number of ways to get impartial debt advice free of charge.



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Myth #2: Closing down credit cards can erase debt. In this article, closing down a card reduces your credit history from which credit card companies evaluate your credit score from. The less history you have, debt utilization increases, therefore hurting your credit score. 



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Myth #3: Bailiffs can enter your property and take any item they want. Bailiffs collecting debt cannot force their way into your home. The only time they can do so is when they’ve entered (peacefully) your property before, or when collecting unpaid fines and income tax. Also, they can’t take just anything inside the house. The things they can legally take are the objects the debtor owns, and not those of the debtor’s family. Bailiffs may need to see proof of ownership.


A person’s debt obligation should not be ignored for managing it is vital to his or her financial future. It is best to do research or talk to an expert or professional for debt advice if you do not know what steps to take. 



 Brennan & Clark is a premier full-service commercial collection agency serving the business community since 1980. Follow this Google+ page for more discussion on debt management.