An outstanding balance doesn't need to be overdue for a set number of days before it can be referred to a debt collection agency. The right time depends on the circumstances of the debt and what's happened since payment became due, however, there are signs when chasing internally has reached its limit.
These are the 5 main signs that an overdue account needs external support.
1. Payment reminders no longer get results
A single missed payment deadline isn't necessarily a reason to refer an account but if a customer has already been given several opportunities to pay and hasn't followed through, there's reason to question if more reminders will achieve a different result.
By this point, it's worth establishing if the customer is unable to pay and if the reason is temporary, or if they're simply unwilling and the account requires further action.
2. An invoice has been outstanding for an extended period
The longer a debt goes unpaid, the harder it is to recover. If a customer's financial situation deteriorates, there may be less money available to pay the balance.
An invoice that's been overdue for 90 days, despite repeated attempts to collect payment, suggests the usual credit control process hasn't worked. Our internal data shows that the chances of successful recovery drop significantly once a debt has been outstanding for more than 180 days.
3. The customer has stopped responding
Without a response from the customer, it's difficult to discuss the outstanding balance or agree on payment. Once repeated calls and emails go unanswered, continuing to chase through the same channels is unlikely to result in a successful outcome.
Where contact details are no longer valid, the customer may need to be traced before recovery efforts can continue. Our Debtor Tracing service uses credit records and other available information to locate the customer's current address to re-establish contact and pursue payment.
4. A dispute is preventing payment
A dispute alone isn't a sign that an overdue account needs external recovery, they're a normal part of business and many are settled directly. A dispute becomes a reason to involve a debt collection agency when it's preventing payment and internal attempts to resolve it have been unsuccessful.
At this point, an independent third party can assess both sides' positions, challenge disagreements that aren't supported by evidence and negotiate a settlement. The key consideration is if a dispute is still being addressed productively or has reached a standstill.
5. Internal collections are taking up too much time
Some accounts need more time and focus than others.
Spending extra time on an outstanding balance makes sense when there's a reasonable chance the effort will lead to payment. Putting hours into chasing or taking time away from other accounts with a better track record is much harder to justify. This is the point a debt is taking too much internal time.
After referral, we review previous correspondence and supporting evidence to understand the situation in full and decide the best route forward. Your dedicated account manager then takes over contact with the customer, working through any issues affecting payment and keeping you informed of progress throughout the case.
With more recovery options available under one roof than standard agencies, we can move between different routes without the need for you to explain the case from the beginning each time, as all previous information is kept on file.
