An unpaid invoice may seem manageable at first. A customer promises to pay next week, then asks for another extension, then stops responding altogether. Before long, an invoice that was only slightly overdue has become a serious accounts receivable problem.
For Canadian businesses, knowing when to send an unpaid account to a collection agency can make an important difference in the recovery process. Waiting indefinitely may feel like the customer-friendly approach, but it can also make an outstanding debt increasingly difficult to resolve.
At Canadian Express Collection Agency (CECA), we help businesses professionally pursue overdue accounts so they can spend less time chasing payments and more time operating their businesses.
The Problem With Letting Receivables Age
Every business will occasionally encounter a late payment. A customer being a few days late does not necessarily mean an account needs to be placed for collection.
The concern begins when repeated reminders, statements, emails or telephone calls fail to produce payment.
As an account gets older, circumstances can change. Contact information may become outdated. A customer may experience additional financial difficulties. A business debtor may close, relocate or accumulate obligations to other creditors.
This is why businesses should have a defined accounts receivable process rather than allowing unpaid invoices to remain unresolved month after month.
Your Staff’s Time Has Value Too
There is another cost associated with unpaid accounts that businesses sometimes overlook: the time spent trying to collect them.
Consider how many hours your employees spend reviewing overdue invoices, sending reminder emails, making telephone calls, documenting conversations and following up on promises to pay.
For one account, that may not seem significant. Across dozens or hundreds of delinquent accounts, however, internal collection efforts can consume considerable administrative resources.
There comes a point when continuing to pursue the debt internally may no longer be the best use of your staff’s time.
That is where a professional collection agency can help.
When Should You Consider a Collection Agency?
There is no single number of days that applies to every business or every debt. Your payment terms, industry and relationship with the customer should all be considered.
However, several warning signs may indicate that an account should receive additional attention:
- The invoice is substantially beyond its agreed payment terms.
- Multiple reminders have been ignored.
- The customer repeatedly promises payment but does not follow through.
- Telephone calls and emails are no longer being returned.
- The customer disputes the debt only after repeated collection attempts.
- Your staff is spending excessive time pursuing the account.
The objective is not to send every slightly overdue customer to collections. It is to recognize when normal internal follow-up is no longer producing results.
Professional Debt Collection Does Not Have to Mean Aggressive Debt Collection
Some businesses hesitate to use a collection agency because they are concerned about how their customers will be treated.
Professional debt recovery should not be about unnecessary confrontation. Effective collection work requires clear communication, proper documentation, persistence and compliance with applicable requirements.
This distinction can be especially important when the debtor was previously a valued customer.
Canadian Express Collection Agency works to pursue outstanding accounts professionally while allowing our clients to step away from the uncomfortable and time-consuming collection process.
Create a Clear Credit and Collection Policy
One of the best ways to manage accounts receivable is to establish the process before an invoice becomes overdue.
Your customers should understand your payment terms, due dates and the consequences of failing to pay.
Internally, your employees should also know what happens at each stage. For example, your company might issue an invoice, send reminders after the due date, attempt direct contact and then review the account for external collection if those efforts are unsuccessful.
Consistency helps prevent accounts from simply being forgotten.
It also sends an important message: your payment terms matter.
Don’t Let Unpaid Accounts Become Forgotten Revenue
Sales are important, but a sale that remains unpaid does not provide the cash flow your business expected from the transaction.
If your company has accumulated overdue invoices, reviewing those accounts now may uncover money that has been sitting in your receivables for months.
Canadian Express Collection Agency provides professional debt collection services for businesses looking for assistance recovering outstanding accounts.
Instead of allowing unpaid invoices to continue aging, consider whether it is time to bring in professional assistance.
Canadian Express Collection Agency (CECA)
Professional debt collection services for Canadian businesses.