When customers continue to ignore your invoices and their accounts get progressively overdue, hiring a collection agency may be the next step for your company.
That’s what Jerry Kane, national sales manager of Diversified Services Group, Highland Park, Ill., told members of the Illinois Association of Landscape Contractors in October 2002. Kane spoke to the group, gathered for a general membership meeting at the Morton Arborteum , Lisle, about how landscape contractors can collect on past-due accounts.
After your billing procedures have been exhausted, Kerry noted, there is a limit to the amount of time and effort your staff can extend to a past-due account.
“After 90 days, after sending three invoices, reminder letters and phone calls, the chances of your getting paid are slim,” he said. “This is especially true if the debtor hasn’t tried to contact you or set up a payment arrangement. If they are not responding, there could be a problem.”
Warning signs of a problem debtor include failure to respond to invoices, letters and phone calls, a lapse in payments, broke promises of payment, complaints about the work performed and disputes about the work performed. Disputes about workmanship (or the work performed) can be reduced by getting the scope of work in writing before the work begins. These signed documents will help third-party agencies’ efforts when an account goes to a collection agency or litigation.
Kane described ways the DSG works with clients. Endorsed by ILCA, the agency provides the association’s members with a discounted contingency fee structure of 30 percent or less, depending on the amount placed for collection. In addition, ILCA receives a one-percent royalty, to be used for member programs. No upfront or start-up fees are required; ILCA members only pay fees based on what is collected.
Collection contracts are fully cancelable. Kane says the company focuses on treating contractors’ customers with dignity and respect, while remaining determined to recover the money in full. Once collected, clients’ funds are directly deposited in a trust account, then remitted to the contractor/creditor on a monthly basis.
“When you used a collection agency, you are sending a serious message to the customer that you want to be paid,” Kane said. “Hiring a collection agency also provides the landscape contractor with more time to attend to their day-to-day business.”
But, starting out on the right foot – with good contracts, credit information, written payment policies and speedy, consistent invoicing and follow-up procedures – is the first step to keeping accounts current and your business running smoothly.
This article was published originally in the January 2003 issue of The Landscape Contractor.
