Best Practices For Handling Past Due Accounts

When customers go past due, you can consider sending these cases to collections. Nonetheless, we find at Aldous & Associates that it works best for businesses to carry out first-party collections for around 90 days before escalating the case to third-party collections. Before sending a case to a collection company like Aldous, here are some best practices to keep in mind.

Timely Communication

As soon as an account’s payment declines, reach out to them directly. This is good practice, as many customers mean to pay but face an issue like a declined credit card, forgetting the due date, or a personal problem. Your business has the chance to remind the person about the payment and give the opportunity to fix the problem in an understanding way, which provides positive customer service.

Reaching out quickly keeps the problem front of mind to encourage payment. It also alerts the person to a problem they may not have known existed. In this initial communication, include relevant information associated with the lack of payment, such as a declined credit card.

Consistency

Have a consistent process that your business follows with each customer. Each person who goes delinquent should be treated the same, following a clearly laid-out plan that all relevant staff members carry out. It’s best for new customers to be made aware of the avenues you will use to contact them (texts, phone calls, emails) and have them agree to it. Also, it is very helpful to capture consent for you and your third-party vendors to contact your members using all the methods mentioned in the signed agreement. 

The consistency of the collections process also includes ongoing communication that escalates in importance. If the initial contact directly following the lack of payment was unsuccessful, your business can send consistent follow-ups. You’ll keep the connection and the doorway open for the member to return. 

It may be helpful to start with a reminder that the payment has not been made and then shift to persuasive tactics, such as reminding about benefits and talking about your frictionless process of getting them taken care of.

Final Warning

If the customer continues to ignore your communication attempts or doesn’t follow through with making the payment, the last step is to give a final warning before sending the case to a third-party collections process. Here is relevant information to include with the notification:

• Communicate that you plan to send the person’s case to a third-party collections company if you do not receive a response or a payment.
• Make an offer to lower the balance if they sign up again.
• Let them know the deadline for the offer/date sent to collections.
• Consider including the information that collections can affect their credit score eventually.

Next Steps

Hopefully, following these best practices will get results. If these efforts still fail to recoup the past due balance, that is when you can send the case to a collections company like Aldous & Associates.

You spent the time providing good customer service and giving fair warning, so if there is a lack of response, it’s reasonable to move forward with third-party collections. At that point, we continue to work together, so your business is encouraged to take the payment if a customer comes directly to you after our team reaches out. Together, we can achieve the best results from best practices.