Question:
Has anyone had experience with running a small business and using a
collection agency? Are there any advantages to this approach of
collecting vs. taking bad debt to court? I've heard things from friends
running different types of businesses but haven't gotten clarity on
some key points:
- With a signed invoice, can a collection company ultimately mark the
credit rating of a customer who refuses to pay for whatever reason?
- Can you demand and ultimately collect on the entire invoice
*including* all costs for collection if you include that in an
agreement on your invoice?
Answer:
Q: Has anyone had experience with running a small business and using a
collection agency? Are there any advantages to this approach of
collecting vs. taking bad debt to court? I've heard things from friends
running different types of businesses but haven't gotten clarity on
some key points:
A: I have in several places I've either worked or consulted. Taking people
to court is easy in the US. Collecting on a judgment is tough. I'd have
to examine your track record and your A/R to make a suggestion of if a
collection agency is worth it.
Q: - With a signed invoice, can a collection company ultimately mark the
credit rating of a customer who refuses to pay for whatever reason?
A:Yes - that's their leverage in dealing with folks. If not for credit
rating, people would just tell collection agencies to 'fly off'.
Q: - Can you demand and ultimately collect on the entire invoice
*including* all costs for collection if you include that in an
agreement on your invoice?
A: Demand your heart out. I'd think you'd need a court case to collect your
fees and the debt. BTW, such court rulings are common and easy to get,
but then you are back having to collect on the judgment.
