The Sobel Group’s Accounts Receivable Management Program

Bonus: The Sobel Group’s Account Receivable Management program is an extra service available to our Business Credit Management clients.  The language in our copyrighted Application and Agreement for Business Credit allows us to offer this program to you.

Scenario:  Your customer is not paying you timely and a default occurs in your payment terms.  What do you do?  In the past your choices were to refer the past due account to a collection attorney or collection company.  In those cases, your best scenario would be that the amount owed was recovered.  The downside is that you did not receive 100% of the past due principal that was due you.  Why not?  It is because the collection attorney or collection company retained an average of 25% to 50% of the monies that they recovered.  On a $20,000 bad debt, you would only receive $10,000 to $15,000 of your money.  That is a big downside.

Because you do not want to lose 25% to 50% of what your customer owes you, the tendency is to hold on to the account and continue to try to have your customer pay you the balance due.  You do that even though you know that the chance of recovery seriously declines each month the account ages.  The bottom line is that the account is eventually referred for collection no earlier than 4 to 6 months past due.

A Free Lunch?  It is said that there is no such thing as a free lunch.  Our Account Receivable Management program, available to our Business Credit Management clients, is the closet thing to it.  Let’s look at the same scenario as above where your customer owes you $20,000 and has not paid.  The Sobel Group’s services are provided as an extension of your credit department.  You simply email or fax us a copy of their statement indicating the balance due, date of last payment and last charge and a copy of our Application and Agreement for Business Credit that your customer signed.  The customer is contacted on your behalf in an attempt to resolve the past due account.  They are instructed to make payment directly to your office.  Since they signed our Application and Agreement for Business Credit, additional fees signed for in that agreement are added to the balance due.  Those fees, when recovered along with your principal past due balance and interest, are remitted to you directly by your customer.  The Sobel Group will bill you for the additional fees and interest added on and paid by the customer.  If the customer does not pay those additional fees or if they were waived in order to affect a speedy resolution of the balance due, our office will bill you for the interest/finance charges added on to the past due principal.  Either way you retain 100% of the past due principal recovered. 

Flexibility:  Often times you will want to retain the business relationship that you developed with your customer.  However, you do want to be paid.  Remember, we are acting as an extension of your credit department.  Our goal is to minimize your losses and increase sales to those customers that are creditworthy.  If the past due customer is one that you want to retain, as long as they resolve their current situation to your satisfaction, you simply indicate that in your cover memo to us along with the copy of their Application and statement.

Decision:  You can decide to;

• Continue to call the past due customer yourself for 4 to 6 months before referring it for collection and seriously decrease the possibility of recovery
• Continue paying a collection attorney or collection company 25% to 50% of your money
• Wait 30 to 60 days for your portion of your money from the collection attorney or collection company

OR

You can use the services of The Sobel Group and have your customer contacted as an extension of your credit department and:

• Retain 100% of the past due principal balance recovered
• Have the customer remit directly to you so you have an immediate cash flow advantage
• Have the flexibility of determining how the customer is contacted (see information regarding ‘Flexibility’ above)
• Not have to continue calling the customer yourself for 4 to 6 months because you do not want to give away 25% to 50% of your money

Summary:  If your customer does not pay you timely, all you need to do is provide us with a copy of their Application and Agreement for Business Credit along with their latest statement.  The customer will be contacted on your behalf advising them to remit directly to you.  Once you receive payment we will bill you for the additional fees and interest signed for and paid by the customer.  If no additional fees were paid, we will bill you for the interest/finance charges added to the principal amount owed.

We ask for a 30-day window to resolve the account.  After that time you can refer the account to a collection attorney or collection company yourself or we will be happy to have our collection attorney make contact on your behalf.  If our collection attorney is used, we will maintain contact with the law office on your behalf, keep you advised as to their progress and assist the law office with asset information, etc. needed to resolve your past due account.  Our collection attorney offers our clients a very competitive contingency fee.

There are no contracts to sign stating that we will remit a certain percentage of the amount recovered to your office in 30 days, 45 days or 60 days, etc.  That is because the money goes directly to you from your customer.  We will simply bill you as indicated above, with you retaining 100% of the past due principal.

We look forward to working with you to help reduce your credit losses.