Choosing a consumer-friendly payment model is an important part of your business strategy. Unless your business is a food truck or counter service restaurant, most people do not want to pay the entire price of your product before they receive anything. If you sell big-ticket items or provide services, you have more options about how to collect payment, and the most consumer-friendly payment options, although they may help you win new customers and repeat business, are not always the ones that get the money into your business bank account quickly. Unpaid bills by consumers are a normal part of operating a business, for reasons that are much bigger than any consumer or any small business. Selling debt to third-party debt buyers or collection agencies can be a quick solution to this problem, but it has its risks. If you are thinking of selling debts owed to your business, contact a Birmingham creditors’ rights lawyer.
If No One Likes Collection Agencies, Why Do They Exist?
Most consumers are more annoyed to get a call from a third-party agency than they are to get a call from a business where they have an outstanding balance on their bill. Collection agencies are also much more likely to offer to settle the debt for a much lower amount than what the consumer originally owed. Why do businesses refer their debts to collection agencies, then? In short, it is a band-aid solution. Collection agencies and other debt buyers buy debt from businesses for a much lower amount than the face value of the debt. Selling $3,000 of debt for $500 yields more income for your business than using your billing employees’ paid time on calls to customers who obviously cannot pay their bills.
What the buyers do with the debt next is outside of your control. They might bombard the customers with increasingly nasty phone calls in an attempt to recover the amount they paid for the debt. Not only will this make the customers mad, it will make them mad at you, because you sold their debt to an obnoxious collection agency. Therefore, what you gain in money, you lose in reputation.
Can Selling Your Debt Be a Win-Win Situation?
In a very limited set of circumstances, selling your customers’ debt can make them like you more. At least one charity, RIP Medical Health, collects donations and uses them to buy medical debt, which it then forgives. So far, it has settled the medical debts of 82,000 patients in a hospital system in two states. If you can find a way to make money off of your patients’ debt in a way that does not harm your patients’ creditor or cause them to face harassment from bill collectors, everyone wins. Best of all, if you send the patients a letter saying that you referred their unpaid bills to a charity instead of a collection agency, it can only help your reputation.
Let Us Help You Today
A creditors’ rights lawyer can help you weigh your options before selling your customers’ or patients’ debt to a third party. Contact Cloud Willis & Ellis for help with your case.