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Question
Hi - I work with a housekeeping service and was wondering what your recommendations would be to collect past due accounts. They are generally not very large (200-1000) but we are unsure of the best course of action for collection. Should we start with a letters then, and turn over to a collection agency? What is the process of small claims court (Michigan) and liens? Your advice is appreciated.
Depending on what your terms are, I would make a phone call when the account becomes past due, requesting payment. If you do not get the payment or a response I would send a friendly reminder.
Phone calls work best and get the fastest and best results, but a series of letters can also work. (check out my book "Get your customers to pay" for letters you can use that start out friendly and nice and gradually get stronger).
Make sure you have documentation to support each debt, such as your signed agreement or contract and any invoices or statements. Once you have sent 3-4 letters and made a few calls with no response, you might want to look into using a collection agency. Your final letter can let the customer know that if you do not receive payment by a certain date, you will be placing the account with a collection agency. Sometimes that will prompt payment to you. Make sure if you do that, that you place the account with an agency on the date you state to the customer.
Check out www.lawdog.com for the laws in your state regarding small claims, or call or visit your local courthouse to ask the dollar limit and pick up the small claims court forms.
Good luck!
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Answers by Expert:
Michelle Dunn
Expertise
As one of the Top 5 Women in Collections, one of the Top 50 Collection Professionals, and winner of the Business Excellence award, I can answer any questions about debt, debt collection, improving business credit, creating a credit policy, enforcing a credit policy and collecting on past due accounts. I can also answer questions in regards to starting a debt collection agency since I have been a bill collector for over 24 years, started and ran my own collection agency for 8 years, and maintain my 12 year old Credit & Collections Association for members of the credit & debt collection industry. I am also the author of the popular and award winning book "Starting a Collection Agency, how to make money collecting money" now on it's 3rd edition. This book has won a the Writers Digest self published award as well as the New York Book Festival Award. I am a repeat contributor to the Wall Street Journal, and have been featured on NPR, CNN, as well as many other national radio and television programs. I have also been featured in national publications such as the Wall Street Journal, Forbes, Smart Money, MSNBC and much more. I have 17 published books to my name and am an accomplished speaker and consultant. I currently write 9 columns for newspapers, magazines and online portals worldwide.
Experience
I have over 24 years experience in debt collection, I started and ran my own collection agency for 8 years and I am the founder & owner of my Credit & Collections Association that I founded in 1998. www.credit-and-collections.com
Organizations
My Credit & Collections Association, I was also a member of the American Collectors Association and Plymouth Chamber of Commerce for 11 years. I am a member of many writing groups as well as my local Women Inspiring Women chapter. I am a member of Know More Media as an expert for their blog on business credit.
Publications
Business NH Magazine, Smart Money Magazine, MSNBC, CNN, Forbes.com, The Wall Street Journal, Home Business Magazine, Entrepreneur Magazine and website, many books, newspapers and television programs as well.
Education/Credentials
I have written 17 books in my collecting money series and one for Entrepreneur Press called the Ultimate Credit and Collections Handbook. My newest book is being published by John Wiley & Sons in May titled, The Guide to Getting Paid, how to weed out bad paying customers, collect on past due balances and avoid bad debt. This book is also being sold to many colleges as a text book.
Awards and Honors
My book Starting a Collection Agency, how to make money collecting money won an award from Writers Digest and the 2007 New York Book Festival in the "How to" category. I have won 2 awards from Dun & Bradstreet and Governor Jean Shaheen. I was nominated as one of the Top 5 Women in Collections twice as well as having been selected as one of Collection Advisor's Top 50 Collection Professionals by my peers.
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