Rates Go Down, Yet Services Goes Up?

The title of this article certainly does not apply to your energy bill!

The question is; Are we able to support the needs of our clients at a price they can afford, while all our costs are going up? They say that if you watch your pennies, you don’t have to worry about your dollars. I just say grow your sales, but don’t ignore your receivables. The profit margin gets slimmer as more accounts get added to the past due column of your aging report.

In 1978, when I started in the debt collection industry, the issues were much simpler and more logical. Debts owed needed to be paid or you were sent to collection. Collecting and processing an account through the legal system, if necessary, was much simpler as well!

Most collection agencies were working primarily in the medical field and most consumers knew that when they received medical services, they were responsible for the bill. If they had medical insurance, the clear issue was that they owed the bill and the insurance company was responsible to pay the bill on their behalf. HMO’s & PPO’s and lack of transparency did not exist! Even the government healthcare program was much cleaner.

Since then, things have become much more complicated. Did anyone notice that healthcare premiums, co-pays, deductibles, and charity care have all gone up? Recoveries in healthcare have gone way down on a national level. It baffles me, yet not too much, that the average person does not understand why medical bills are much higher today. Simply put, when fewer people pay, more people pay more. In the past, when someone could not pay their bill, it was simply not collected, because they were truly unable to pay. That ship may have already sailed. Today the waters are extremely muddy and, lucky for you, we have developed a customer service approach that is still effective when collecting medical, consumer and commercial debt.

Commercial debts used to be more straight forward and the business that owed the debt was much easier to communicate with. The adage of loaning money on a handshake was not all that uncommon. Today, it is easier to hide behind technology and shell games to avoid paying. However, this can be countered by obtaining the proper information and agreements in the beginning of the business relationship.

In order to take an account for collection and be the most effective for our clients, it requires good information at the start. We often receive accounts with the least amount of information and weak agreements, often without proper identifiers to show who is even responsible for the debt. In addition, the debt has aged too long. The muddy waters can really hold up the process and sometimes make it near impossible to collect. It’s like restructuring a crime scene.

We are currently in an economy that reminds me of the late 70’s, early 80’s, and it doesn’t look like it’s going to get better anytime soon. I am referring to all consumer and commercial debt.

We are looking at some tough times ahead and now is the time to look at strengthening your operations, both in growing your sales and reducing your aging accounts receivable at the same time.

I used to watch a cartoon on television about a turtle and a wizard. The turtle would ask the wizard to turn him into a hero of some kind and send him on an adventure. Right about the time the turtle was in over his head, and the disaster was about to strike, he would want to come home. He would cry out, “Mr. Wizard, Mr. Wizard, I want to come home!” At the very last second, Mr. Wizard would appear, wave his wand, and say some magic words just in time to save the turtle. The turtle would sigh in great relief to be back home again, living the simpler life. Carrying your aged accounts too long will make you look like the hero of the day; however, you may be asking for help when it is too late!

Following proper operating procedures and good communication with your team and customers will allow your organization, and possibly your customer as well, to survive into the future. Having good account data and sending accounts that are not paying to collection at the right time will allow us to better assist in recovering your accounts more effectively.  When I started my agency here in California in 1983, bank interest rates were approaching 18%. You could say that interest rates are not at 18% yet. However, with inflation and higher cost of service, such as Employment costs, taxes, compliance, and other additional costs businesses face today, what is today’s true cost of operation?

Some agencies choose to lower their commission rates and cut corners to make up the difference. At Tavelli Co., we chose to remain competitive while continuing to be a high-quality service provider, which to this day results in greater focus on the percentage of recovery with fewer complaints. Which do you prefer, a lower commission rate, or more money returned to your organization with fewer complaints and headaches for you, the client?

We focus on working with the client to prevent bad debt and at the same time recover debt with better information. Good information and agreements along with proper follow up are the key to sales, client service, and receivables management.

Many companies today are not ready, or focused, on what it will take for them to succeed over the next couple of years, are you? Intelligent operation and understanding of all aspects of your business will benefit your organization as well as your clients, especially when it comes to the best ways of growing sales, while properly granting credit and keeping your receivables current.

Today, I find myself in the position of consultant as much as, or more than, a bill collector. We have always taken the approach that over time, working with Tavelli Co., Inc., our goal for our clients is to make it easier to focus on accounts receivable and credit management to reduce bad debt and at the same time, grow their business.

If you have accounts receivable and are looking for a debt collection partner serving California who focuses on the long-term health of your past-due accounts, look no further. At Tavelli Co., we have decades of experience within the collection space and have mastered the art of empathetic collections. To discuss your collections needs, call our office at (707) 509-5565.

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Tavelli Co., Inc. has over 37 years of unparalleled experience in the debt collection and receivables management industry. Our mission is to achieve the right balance between getting clients paid and being empathetic to debtor circumstances, through implementing innovative practices, hiring experienced people, and improving business decisions through analytics. We provide peace of mind to all involved by collecting money with no complaints. Tavelli Co., Inc. takes the time to carefully listen to your customers and share their feedback with you through meaningful data and transparent communication, so you have access to the information you need to make quality decisions and improve your processes in the future. Contact us today and let the debt collection experts at Tavelli Co., Inc. help you set your business up for success.

IMPORTANT: Information provided by Tavelli Co., Inc., any employees of Tavelli Co., Inc., or its subsidiaries is not intended as legal advice and may not be used as legal advice. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own legal counsel.