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Commercial Collection: How old should a debt be?

When should I place a delinquent commercial account for collection? The answer can be tricky, and can have some bearing on the amount you collect.

In our last blog, we talked about the 10 signs that a delinquent account should be sent to the services of a commercial debt collection agency such as Ross, Stuart & Dawson. After all, while you're able to track down many past-due payments on your own, it's also true that many require a professional's help.

One very key element we should fully address is timing: The age of a delinquent account is one of the biggest factors in determining whether or not a debt gets paid. Unfortunately, you can't be guaranteed your full amount owed when the debt is older.

The older the debt, the harder it is to collect. Remember the general rule about the amounts you will collect:

  • After three months the probability is that you will only collect $0.73 of each dollar delinquent.
  • After six months, you'll collect only about $0.54 of every dollar.
  • After one year, the best expectation is that only about $0.26 of every delinquent dollar will be collected.

While something is of course better than nothing, it's not enough to cover your expenses! Don't let debts get too old before you come to us. The best time to enlist the services of a commercial debt collection agency is 60-90 days of the invoice due date. Commercial collection agencies will get you what you're owed, but we need to consider timing. Incorporating this strategy will help ensure maximum recoveries with the least cost to your company.

Lee VandenHeuvel is President/CEO of Ross, Stuart & Dawson, Inc., a commercial collection agency in Michigan is certified by the Commercial League of America. Lee has been helping creditors for 30 years to review and improve their credit/collection processes and is a frequent speaker at industry conferences.