1. NEWSLETTER VOLUME 6, ISSUE 2 February 2012
Five Consecutive Years
Top Ten 3 Use “Address Service Requested”
One of the most difficult collection problems is tracking
Ways to down a customer who has “skipped”. All businesses should
be aware of a special service offered by the Post Office.
Improve Cash Flow Any statement or correspondence sent out from a business
By American Agencies or professional office should have the words “Address
Service Requested” printed or stamped on the envelope,
When a company provides a product or service, it has a right just below your return address in the top left corner. If a
to expect to be paid on a timely basis. However, anyone statement or invoice is sent to a customer who has moved
who’s been in business a month or more has learned that without informing you of their new address, and the words
prompt payment is not always the case. Often, accounts get “Address Service Requested” appear on the envelope, the
seriously past due, or when payments are made, there are Post Office will research this information and return the
insufficient funds in the customer’s account to cover a check. envelope to you on a yellow sticker that gives the new
Accounts not paid within terms can have a dramatically address or other updated information. If the customer has
negative impact on the cash flow of a business. placed a “forwarding order” with the Post Office, the Post
Office is required to forward the envelope to the customer
and give you a form #3547 with the new address and charge
1 Have a Defined Credit Collection Policy you approx. 50 cents. This will keep your address files up to
date.
One of the major causes of overdue receivables is that
the business has not defined to its customers and staff when
accounts are to be paid. If customers are not educated that 4 Contact Overdue Accounts More Frequently
accounts are to be paid on time, then chances are they’ll pay
late or sometimes not at all. Make sure that your company’s No law says you can contact a customer only once a
terms of payment are clearly stated in writing to each month. The old adage “The squeaky wheel gets the grease”
customer. has a great deal of merit when it comes to collecting past due
accounts. It’s an excellent idea to contact late payers every
2 Invoice Promptly and Send Statements 10-14 days. Doing so will enable you to diplomatically
Regularly remind the customer of your terms of payment.
If you don’t have a systematic invoicing and billing 5 Use Your Aging Sheet, Not your Feelings
system, get one. Many times the customer hasn’t paid simply
because they haven’t been billed or reminded to pay in a Many businesses (or well-meaning people on their staff)
timely manner. This situation usually occurs in smaller or have let an account age beyond the point of ever being
newer businesses where they’re short on staff to invoice and collected because he or she “felt” the customer would pay
bill. eventually. While there are a few isolated cases of unusual
Continued to page 2
© 2009-2012 American Agencies. All Rights Reserved.® 1

2. American Agencies News
February 2012 Volume 6 Issue 2
Continued from page 1
situations, the truth is that if you aren’t being paid, someone than likely, you’ve requested payment four to six times in
else is. So stick to your systematic plan of follow up. You’ll the form of phone calls, letters and statements. Statistics
soon know who intends to really pay and who doesn’t. You show that after 90 days, the effect of in-house collection
can then take appropriate action once you know where you efforts wears off 80%. That means that the time and financial
stand. resources budgeted for collection efforts should be focused
within the first 90 days where the bulk of your accounts can
and should be collected.
6 Make Sure Your Staff is Trained From that point on, a third party can motivate a customer
to pay in ways you cannot, simply because the demand for
Even “experienced” staff members can sometimes payment is coming from someone other than you. Before
become jaded when dealing with past due customers. This paying a percentage to a collection agency, or using small
usually occurs when they have made and broken promises claims court or an attorney, check into using a fixed flat fee
for payment. Make sure the staff is firm, yet courteous when collection service such as American Agencies has licensed
dealing with them. Your collection staff could benefit from offices nationwide, has the highest recovery rate in the
customer service training because, in effect, they must “sell” industry, and charges a fixed fee of around $10 per account,
your customers on the idea that you expect to be paid. Make regardless of the amount owed, or where the debtor is
sure that your collection staff is trained to not only bring the located.
account current, but to also maintain good will with them.
10 Remember that Nobody Collects Every
7 Admit and Correct any Mistakes on Your Part Account
Sometimes customers don’t pay because they feel you’ve Even by setting up and adhering to a specific collection
made a mistake. If you have, quickly admit it and correct it. plan, there are a few accounts that will never be collected.
Your customer realizes that mistakes can happen in business. By identifying these accounts early, you will save yourself
Unfortunately, many customers believe that “the owner/ and your company a great deal of time and money. Even
president doesn’t need the money”. Denying an obvious though a few may slip by, you’ll find that overall the number
error only fans the fire of resentment your customer may of slow pay and nonpaying accounts will greatly diminish,
already feel. and that’s a victory in itself!
8 Follow the Collection Laws in Your State
Inside this issue:
In many states, businesses are governed by the same
collection laws as are collection agencies. For example,
calling customers at an odd hour or disclosing to a third Top 10 Ways to Improve Cash Flow P.1
party that they owe you money are just a couple of the
numerous collection practices that can cause serious The Magic of 3rd Party C ollections P.3
repercussions. If you’re not sure, call your state’s department
of finance which governs and monitors collection agencies. Warning Signs P.4
9 Use a Third Party Sooner Pass It On P.4
If you’ve systematically pursued your past due accounts Tip of the Month P.4
for 60 to 90 days from the due date, (and they still haven’t
paid) you’re being delivered a message by your client. More
2
© 2009-2012 American Agencies. All Rights Reserved.®

3. American Agencies News
The Magic of 3rd Party Collections
THE PRIVACY OF MAIL IS LESS EMBARRASSING THAN A PERSONAL PHONE CALL.
Although many businesses believe that personal contact is more comfortable, for a debtor
the opposite is true. The only reason personal contact would be preferred by a debtor is
when it is viewed as an opportunity to delay payment.
FIRST PARTY OUTGOING PHONE CALLS PRODUCE EXCUSES AND PROMISES.
“I have worked with Phone calls are often viewed as less critical to debtors who feel they can “wait for the next
American Agencies for the call” to make a payment. When debtors realize a creditor is willing to make multiple calls
past 15 years. They have before they are placed with a collection agency they will use that perceived “grace period” to
provided our organization stall payment (conditioning you) as long as they can.
with great collection
services.” PERSONAL CONTACT RESULTS IN REPEATED DELINQUENCIES. Debtors remember
your collection process. When they know you make several calls before placement with a
“One area in which collection agency they will take advantage of you. Using third party impact early will
American Agencies condition and train them to expect added costs and collection agency activity – which will
performs above average is lower the number of repetitive delinquencies.
in their customer service. I
rate their skills as THIRD PARTY WRITTEN DEMANDS PRODUCE HIGHER RECOVERY RATES. When
excellent.” debtors realize they must take action to avoid legal implications and/or additional costs, a
debt moves up their payment priority list. Collection agency demands have a greater impact
providing higher results than first party internal efforts.
For more information, THIRD PARTY DEMANDS ARE PAID BEFORE FIRST PARTY REQUESTS. The majority
contact us at: of the time debtors owe more than one entity (or they would be paying you). When they
receive demands from a third party the written ones are seen as more urgent and most
(866) 961-9600 often are the first ones paid.
Or visit our website at: WRITTEN DEMANDS PROVIDE A LASTING VISIBLE IMPACT (REMINDER). Phone
conversations lose their impact and are usually forgotten.
www.americanagencies.com
THIRD PARTY INVOLVEMENT TURNS THE TABLE. Causing the debtor to initiate
contact with you in order to negotiate payment puts you in a better position. When they call
you they are in a different frame of mind (calling to negotiate) than when you are chasing
them. Because business initiated phone contact is seen as more dignified and comfortable
(though it is not), your tendency is to be more lenient when you hear the many excuses they
can use to stall payment -- extending payment arrangements instead of securing payment.
TODAY’S TECHNOLOGY IS WORKING AGAINST YOU. With the prolific use of caller ID,
voice mail, and answering machines it’s too easy for debtors to avoid your calls, causing
repeated call backs and wasting your time. Studies show that the “get through” rate to
debtors by phone is about 30% versus the dependability of the U.S. Post Office at over
99%.
AMERICAN COLLECTORS ASSOCIATION RESEARCH. Studies by the ACA reveal that,
after 2 or 3 personal contacts, “Internal Effectiveness” drops off significantly. After “Internal
Effectiveness” drops off, third party involvement is the only effective solution.

4. American Agencies News
February 2012 Volume 6 Issue 2
> > > WARNING SIGNS < < <
WHEN TO PLACE AN ACCOUNT WITH A PASS IT ON
3rd party collection service
Do you know someone who would like to receive
1. DISCONNECTED PHONE OR CHANGED TO the American Agencies Newsletter? Call us at
“UNLISTED” (866) 961-9600 with the individual’s name,
2. BROKEN PROMISES - “THE CHECK’S IN THE company and company address.
MAIL”
3. YOU GET VOICE MAIL, ANSWERING The articles and opinions in this publication are for
SERVICE OR MACHINE
general information only and are not intended to
4. NOT AVAILABLE TO TAKE YOUR CALLS ……
provide specific advice or recommendations for any
“IN A MEETING”
5. YOUR CERTIFIED MAIL RETURNED individual or business. We suggest that you consult
“UNCLAIMED” your attorney, accountant, financial and/or tax
6. NET 10 OR NET 30 TERMS, AND ACCOUNT IS advisor with regard to your individual situation.
45-60 DAYS PAST DUE
7. PARTIAL PAYMENTS GETTING SMALLER All rights reserved, American Agencies Newsletter
8. MISSES PAYMENTS, REQUEST FOR is published monthly for our clients and
SMALLER PAYMENTS prospective clients. We welcome your comments
9. BAD CHECK NOT MADE GOOD WITHIN 3 and contributions.
DAYS. BANK HAS ALREADY
10. NOTIFIED THEM OF THEIR RETURNED
CHECK.
11. MISSES 2 OR MORE PAYMENTS ON TIP OF THE MONTH
REVOLVING ACCOUNT
12. ADMISSION OF INABILITY TO PAY. Have a Well Defined Credit Granting Policy
13. SERVICE WASN’T PERFORMED
CORRECTLY…....DEBT DISPUTED Large corporations have well defined credit-granting
policies. This alone reduces their losses from un-
Many businesses will unknowingly set a trend with recoverable accounts receivable up to 50%. Most small
some new and old customers to become a possible to medium businesses do not have any policy other
problem in the future. This is done by overlooking than using a check verification service. Following are
smaller balance accounts to focus on the larger policies, which most businesses should have:
balances. If you are doing this, you are skimming your
own accounts and allowing a negative payment pattern • Invoice at point of sale
to develop, thus inviting these once smaller accounts to • Signed credit application
make bigger purchases with the intent of keeping the • Net 30 terms
same terms as before . . . their terms instead of yours. • Interest and/or collection fees added at 30 days past
Every account should be worked systematically and be due
billed on time regardless of the amount due. • Monthly statements
• Phone call at 30 days past due
www.twitter.com/americanagenc • Turn over to collection agency at 60 – 90 days past
www.facebook.com/americanagencies due
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© 2009-2012 American Agencies. All Rights Reserved.®