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Debt Collectors Try Soft Approach (Indianapolis Business Journal)
October 24th, 2009
Peter Schnitzler, Indianapolis Business Journal
When 30 days become 45, then 60 and eventually 90, small-business owners face a harsh choice. They can press aggressively for payment of delinquent bills, knowing they’ll likely lose precious customers. Or they can write off bad debts until they become crippling.
It’s an increasingly common dilemma in the recession. Some local entrepreneurs have turned in frustration to the courts for resolution of payment disputes, with decidedly mixed results.
Meanwhile, others are enjoying success through pre-emptive efforts to communicate with their customers before bills become past due. Gentle reminders don’t always work. But ignoring the problem never does.
“What we coach our clients to do, and what we help them do, is make the call caring, empathetic and understanding,” said Bob Compton, CEO of Indianapolis- based automatic voice messaging firm Vontoo Inc. “Because a collection call that hammers someone in this economy is not going to get you anywhere.”
Slow bill payment is a growing national problem in the recession. Small businesses are paying their invoices 25-percent slower than a year ago, and 20-percent slower than the overall business average. That’s according to a report released this month by Quincy, Mass., business analytics firm Cortera Inc. The report was based on a survey of 260,000 companies with 500 employees or fewer.
Before the recession, small businesses paid their bills about as quickly as big businesses did, Cortera found. But small businesses now have a 55-percent higher rate of overdue bills than their larger counterparts.
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