A pre-collection letter service is a process by which collection agencies send demand letters to delinquent customers to collect on past due accounts. The benefits of using this service include improved cash flow, reduced bad debt expenses, and creating the potential for a win-win condition with you and the customer. If the customer pays during this process, they are showing that they value their relationship with your company. The pre-collection letter service works by sending letters to customers notifying them of their past due account and requesting payment. If the customer does not respond or make a payment, the account is typically moved to a collection representative for resolution.
Pre-Collect Letter Services
CCI offers two options for pre-collect letter services. These options allow you to decide which is best for you and your company.
Free Demand Option- This option can only be selected if you commit to placing the account for collections. Under this program the debtor will receive two demand letters on CCI’s letterhead, at no cost to you. Any money paid during the 14 days is at no charge to you. If they do not pay in full during the 14 days, the account is automatically placed for collections for the remaining balance due. This option has a high success rate, as the customer feels the escalation of the account being placed for collections, and many times wants to re-establish a good relationship with your company.
3 Letter Series Option– This option includes a series of three escalating demand letters on CCI letterhead. The main differences between this and the free demand option are: There is a flat fee for this service, and at the end of the cycle you get to decide whether or not you place the account for collections.
Benefits of Using a Pre-Collection Service
By using a collection agency, you are telling your customer time has run out and you will no longer tolerate nonpayment. Additionally, the cost of using the service is comparable to the cost you would incur internally to continue to pursue the debt. Most importantly, your staff now has the time to follow up on less severe past due issues and ensure that your other customers are happy with your product and service.
Many of our clients have found that a written notice from CCI is enough for a customer to understand they must pay immediately to protect their credit. This can save your customer embarrassment and allow them to salvage their relationship with your company. The involvement of a third party often encourages the customer to contact you to resolve the issue directly. If they care about their business relationship, they will reach out to you to resolve the issue before it goes to the next step. In addition to these benefits a pre-collection service can reduce your bad debt and increase cash flow. Depending on what service you select, you may be able to recover your past due accounts without any fees.
Commercial Collectors Inc. (CCI) is NACM North Central’s preferred collection services provider. Having worked with NACM North Central members for many years, CCI has the knowledge and experience needed to provide efficient, effective, service-focused collections to reduce write-offs. To find out how CCI can help you, contact Larry Barthel at [email protected] or (763) 453-7408, or visit our website.