Imagine that you are sitting at home on a night much like tonight. It is a cool summer evening, and you are happily nestled-in with your family. The kids have finally agreed to watch one of your favorite 80’s movies, and you can smell the popcorn popping in the kitchen. You look around at the home that you have built, things are going well, maintenance is up-to-date on everything, and worries are at a minimum.
Suddenly the fire alarm screams out. Oh no, the popcorn!
The smoke billows out of your kitchen as you frantically search for the one thing that can help limit the fire, and the impending doom of losing it all. That one simple little thing that will stop a home-wrecking, memory-engulfing, life-changing fire from consuming everything.
Where is the fire extinguisher?
July 2015 is not a bad time to be in the equipment finance and commercial lending industries. Sales are up, portfolios are growing at a record pace, delinquencies are down, and the small business sector is exploding. All signs point to “Concentrate on Sales,” and rightfully so. I am from Minnesota, and we have a saying: “Make hay when the sun is shining.”
If you are like a lot of my clients, your salespeople own the deals from beginning to end, whether good or bad. I am sure that you can identify with watching one of your best sales reps chase a deal that is spinning out of control. Wouldn’t you rather have that person on a call that was adding new value to your portfolio?
One of the most important skills I have developed as a business owner is identifying employees’ strengths, and guiding them in that direction. Having people in the right seat at the right time, and moving in the same direction, is vital to a company’s success. I ask myself this question constantly: “How can this person make the most money for us, and what can I do to make sure that nothing gets in this person’s way?”
In this sales-driven economy, it makes sense to keep salespeople smiling and dialing. That being said, allowing delinquencies to get out of hand is obviously a huge mistake. Think of your business as the home in the example that I started with. Things are great, and everyone feels comfortable.
But how long until the fire starts? What is your plan when we see another 2008...or worse?
No one wants to see the home that they have worked so hard to build turn to ashes. By aligning yourself with a professional third-party collection agency now, you can eliminate most of your back-end collections work both now, while times are good, and – most importantly – when the fire alarm goes off.
Screening Third-Party Collections Agencies
Ask your prospective agency what types of accounts their collectors have the most experience with, and make sure that your types of deals are squarely in their wheelhouse. Ask specific questions about their process – from start to finish:
- What skip-tracing sources do they use?
- Do they check for bankruptcies prior to collection?
- Do they check credit? Can they report?
- How many times will the owing party be contacted per day, week, etc., and how will they be contacted?
- How can you keep track of their progress? Will they contact you every couple of weeks, or will they provide software and log-ins so that you can monitor their daily progress?
- Are they a full-service agency, so that they can provide all of the help that you need?
- Do they provide all of the reporting and accountability that you need?
Once you have a trusted partner and a process in place that can handle all of the inevitable future fires and can produce expected and measurable results, you will feel better-prepared for whatever may come your way.
So go out there and sell the heck out of whatever your loan product is, but make sure to keep that fire extinguisher in plain sight. Now sit back, and enjoy that 80’s movie ... I recommend “Stand By Me.”