Ideas for Prompt Collections and Fair Practices

A Commercial Collection Agency Association study quoted in an Accounting Office and Management and Administrative Report (AOMAR) says that the probability of collecting on a late account after three months drops to 73 percent, after six months to 57 percent and after one year to 29 percent. Richard Baumann, a partner at Sulmeyer Katz, a Los Angeles law firm, said in the AOMAR report, that he advises partners and administrative managers at CPA firms to stay on top of all outstanding bills.

“I counsel my clients not to let these things get out of hand. Treat small wounds early,” Baumann said.

As part of routine review of accounts receivable, Baumann recommends that administrative staff step in when partners are too busy to follow up on outstanding bills. Some of his other suggestions in the AOMAR report include:

  1. Expect prompt payment and when you don’t get it, act;
  2. Speak to someone in a position to authorize payment;
  3. Ascertain why the bill hasn’t been paid;
  4. Get clients to confirm their obligation to pay;
  5. Consider your firm’s options; and
  6. Consider a third-party collections agency.

In recent years, the Federal Trade Commission (FTC) has received an increasing number of complaints about abusive tactics used by collectors – the number grew from 13,900 in 2000 to 58,687 last year, according to a report in the Washington Post.

The Fair Debt Collections Practice Act (FDCPA), a law that was meant to protect consumers from harassment, according to Joel Walsh in Webpronews.com, details some fair collections practices. FDCPA states for example, that the collector may not contact the debtor at any unusual time or place or “at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.”

FDCPA also prohibits false statements and unfair practices. According to the FTC publication “Fair Debt Collections,” examples of unfair practices are collecting an amount greater than the debt, using deception to make the debtor accept collect calls or pay for telegrams, or contacting the debtor by postcard.

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