One of the more frequent questions we receive is, “What do I do when the customer you sent to collection wants to pay me directly?”
First, this is an excellent problem to have. On average, considering all industries with whom we work, the recovery rate is approximately 30%, so receiving payment means you are already beating the odds.
Second, if your customer is paying the full amount of your account – take their money. The next step is to let your collection provider know you have received full payment. That way, the agency can stop contacting your customer and update the customers’ credit file as Paid In Full. This step is critical as creditors and data furnishers (collection agencies) are legally responsible for accurate credit reporting.
But What If My Customer Pays an Installment?
Our first response is to take their initial payment to reduce your risk, and then don’t get into repayment negotiations. The reason why we say this is that you do not have all the information to negotiate effectively, whereas your collection service provider should have the customers full financial profile, including a clear picture of their capacity to pay you in full and how quickly
Side Story – our national Media customer accepted $1,000 per month on a $150, 000 debt, and felt lucky. Unfortunately, they didn’t know their customer had a low seven-figure line of credit and only had a low five-figure balance. Instead of paid in full, they’re stuck with payments for $1,000 a month from now until somewhere warm freezes over – unless they use a Withdrawn Offer Strategy (another blog post).
Had the client consulted us before accepting this agreement, the radio advertising account could be paid in full by now. Not taking the deal is harder than it sounds. Most creditors will do it because they felt fortunate that the account holder is now calling them. It isn’t magic that they are calling now – its because they don’t like the fact we are pushing them, and they are hoping you give them better terms.
If your customer shows up in your office and wants to negotiate repayment terms, we recommend conferencing in your collection service provider. Tell your customer you are encouraged to see the want to resolve their account but have engaged a collection professional, and they must be involved in the negotiation. Your firm will have to pay the collection firms fee, so let them earn it. It is in their interest and yours to negotiate the best terms possible.
You Are Part Of A Team Now
And finally, let your collection provider know of all communication or payments from your past-due client. It shows your customer that you and your vendor are on the same page and in sync. Otherwise, your customer can take advantage of you yet again. You have hired third-party professionals – let them do their work.