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Customer or Debtor?


The first step in joining a collection agency is identifying the difference between a customer and a debtor. The major difference between the two is obviously the money that ends up in your pocket, however how can you tell a customer is turning into a debtor without it being too late? Here at Kearns Brinen & Monaghan we use something called the Red Flag System. This system will help save you time and money on your delinquent accounts.

Red Flag 1: Avoiding Contact

How many accounts do you have where you have left 2 or more messages and have not received a call back? The first sign of delinquency is that they no longer want to make regular contact with you. Why would they? They owe you money and they know that you’ll do what it takes to get your money back. This is about the time you should start considering your steps in handling the client.

Red Flag 2: Broken Promises

All too often we see our clients receiving partial payments or worse yet, no payment at all. When your faced with these types of situations, it is important to uphold the regulations of payment that you had set up at the beginning of your relationship.

Red Flag 3: Bad Checks

This is one of the most common red flags and one that should be the most alarming. A bad check demonstrates an unwillingness to pay and is more than likely the first of many checks to bounce. This red flag will often lead to others.

Red Flag 4: Disputes

How often do you have an account that tries to dispute the quality of the goods and services that they had received over 60 days ago? This dispute will show that they are unwilling to pay for the goods that had received. In situations like this where a customer is trying to pull the wool over your eyes, take a step back and remain firm on the agreed contract.

In a world where not every customer wants to pay for the goods and services they purchase, business owners must recognize the difference between paying customers and debtors. By using these red flags and recognizing when a client-customer relationship is heading south, you can save your company time and money; both of which have extreme value to your future success.