How to Send Someone to Collections: The Importance of Taking Action Quickly
Managing outstanding debts is a challenge that many businesses face. When customers or clients fail to pay on time, it can create serious financial strain. Sending someone to collections is often necessary to recover unpaid balances, but timing is critical. The sooner you act, the higher the chances of successfully recovering what is owed.
Why Acting Quickly Matters in Debt Collection
Statistics highlight the importance of early intervention. Research shows that initiating debt collection efforts within the first three months of delinquency results in an average recovery rate of approximately 80%. However, if collection activities are delayed for six months or more, this rate drops to about 40% (Voss Klein). The longer a debt remains unpaid, the less likely it is to be recovered.
Financial losses also increase with delayed action. Studies indicate that debts collected within the first month result in minimal losses—typically around 5% of the total amount owed. In contrast, waiting six months or longer can lead to losses of up to 75% (Voss Klein). Businesses that fail to act promptly risk not only losing their money but also weakening their overall financial stability.
How to Send a Debt to Collections
If you have an unpaid debt and the customer is not responding to your attempts to collect, here are the steps you should take:
- Attempt to Collect the Debt Yourself – Send invoices, payment reminders, and contact the debtor directly through phone or email. Offer a payment plan if necessary.
- Verify the Debt – Ensure that the debt is valid, properly documented, and falls within the legal statute of limitations.
- Choose a Collection Agency – Select a reputable, licensed debt collection agency that specializes in your industry and complies with the Fair Debt Collection Practices Act (FDCPA).
- Provide Documentation – The collection agency will require proof of the debt, such as signed contracts, invoices, and records of communication.
- Allow the Agency to Handle the Process – Once you hand over the case, the collection agency will take over the recovery process, using professional methods to contact the debtor and negotiate payment.
- Consider Legal Action if Necessary – If the debtor still refuses to pay, the collection agency may recommend taking legal action, such as filing a lawsuit or seeking wage garnishment (where legally permitted).
The Benefits of Timely Debt Collection
Beyond improving recovery rates, early debt collection efforts help maintain positive relationships with customers. Acting quickly allows businesses to address payment issues before they escalate into disputes, fostering open communication and reducing the likelihood of permanently damaging client relationships (CMOS).
Legal compliance is another crucial factor. Many states have statutes of limitations that restrict the time frame within which debts can be legally collected. If you wait too long, you may lose your right to recover the funds altogether. Acting promptly ensures that your claim remains legally enforceable (CMOS).
Get Professional Assistance Today
Acting swiftly in debt collection is not just a procedural step—it’s a strategic necessity. It enhances your chances of recovery, minimizes financial losses, preserves client relationships, and ensures legal compliance.
If you’re dealing with unpaid debts, don’t wait. Contact us today for a free quote on collections and to get answers to any questions you may have. Our team of professionals is ready to help you recover outstanding debts quickly and effectively.
