The building industry is no walk in the park, and contractors work hard for their money. The last thing contractors need is clients who are taking too much time or have no intention of paying them what they’re owed. Unfortunately, this is sometimes a reality with which contractors must contend.
Contractors often struggle to manage their workload and deal with accounts that are past due at the same time. If you’re a contractor, what are some warning signs that you are losing this battle and could use some professional debt collection assistance?
- A failing income statement. No matter what age of the business, it’s important to keep tabs on your income statement. Outstanding debt and a rising accounts receivables line are two warning signs not to be ignored.
- Your clients are not paying on time. This may seem a bit obvious, but it’s a warning sign that you may have an issue at hand. If a client is more than 90 days past due, then it is, unfortunately, a red flag. A slow paying account needs to be identified and handled as quickly as possible.
- A client’s check bounces. At the end of the day, a check that doesn’t clear is a problem. To help avoid this, contractors may want to consider running a credit check on their clients to avoid a potential problem or slow payer.
- A client doesn’t pay within the terms agreed. Another worrying sign is when a client reneges on the payment terms to which he or she agreed. This may signal either deliberate payment avoidance or a client cash flow issue that will impact your business.
- It’s more than one client. If a contractor has several clients with payment issues, then it may be time to get help from a debt collection agency. If this is an on-going trend for a contractor, it could result in financial hardships and loss of income.
- A client with an outstanding balance cannot be reached. If a client who is avoiding payment has suddenly vanished, this a clear sign that a contractor may need the help of a debt collection agency. A lot of agencies have departments that deal specifically with tracking down clients that need skip tracing efforts.
- Your clients are spread out in different areas. Similar to the above, it can be tricky to track down clients when they are not all in one area. Effective debt collections agencies can also help with this issue.
- Contractors don’t have resources or know how to deal with collections. Hiring a debt collection agency to help contractors manage their debt will allow them to focus on other clients and help prevent a further loss of finances. As a contractor, you may not be fully aware of how collection laws and regulations work. This is where debt collection agencies can step in and provide professional assistance.
What Debt Collection Options Do Contractors Have?
It’s important that contractors combat any warning signs if and when they arise. No one wants to find themselves in these types of situations. However, should these problems surface, the good news is that help is available.
Rocket Receivables offers a two-stage process of collections consisting of:
- Early-stage collections from one to 120-days past due with fixed-fee pricing.
- Later stage contingency collections to capture revenue from the more difficult accounts past the 120-day mark.