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Effectiveness of collection letter offered by Concierge Program
December 9, 2021
Effectiveness of collection letter offered by Concierge Program
          So KK has recently started to offer a dunning letter as part of the Concierge Program package; Wonderful idea. I have a client who has only paid me on time once. The second payment was a year late. 
          I would like to check the effectiveness of the dunning letter.
Concierge Client
name withheld
          December used to be an interesting time of year for “collections”.  Many businesses tittering on financial collapse try to hang on during the holiday season, particularly restaurants, which, by the way, probably make up a disproportionate number of defaulting alarm accounts.  Many businesses actually do better during the holiday season and want to either see whether they can make enough to survive or scoop up enough to make a get-a-way.  In January we see an increase in collection efforts.
          We added the benefit of a free collection letter monthly to the Concierge Program and a number of our Concierge Clients have taken advantage of it.  So you can rest assured that you won’t be the first client.  Assessing the effectiveness of the collection letter will be quite interesting, for me at least.  I’m only doing alarm collection work for almost 50 years, so I must be doing something right.  Also, since I’ve been a United States Bankruptcy Trustee for almost 50 years I am pretty good at drafting a collection letter and my staff is more than pretty good pursuing delinquent alarm accounts.  We generally charge $75 for a form collection letter that tells the customer to call our alarm client directly.  If we are sending the collection letter on a contingency basis we tell the customer to call K&K to resolve the issue and most times we skip the collection letter for commercial accounts and go straight to a Demand For Arbitration.  Residential accounts are required to get a Fair Debt Collection Notice, though we have started including that in a Demand For Arbitration so we don’t waste a month.
          Wasting time is our client’s worst enemy when it comes to collections.  The above client advises that it’s been a year since the last payment was due.  Why would anyone wait for a year before taking collection action?  Well, you might have your reasons, but the consequence of waiting is that the collection efforts have less chance of success because of the delay.  The longer you wait to pursue a delinquent account the less chance you have a saving the account or collecting on the account if saving it isn’t in the cards.
          Some of our clients wait so long the alarm system has been replaced.  It’s kind of hard to save the account, re-instate the account, once another alarm company has taken over the account. 
          Success in collection matters has a direct correlation between time in default and when collection efforts begin.  And I am not talking about in-house collection efforts, which should be limited to one call or letter.  Harassing customers to clear up their account rarely works and causes animosity that is hard to overcome.  Too many times we hear a delinquent customer tell us how much they hate the alarm company owner or employee and would rather spend money fighting than paying to clear the account.
          How long should you wait to pursue a delinquent account?  It’s really a simple answer.  You wait less than 30 days if the customer falls out of its customary payment history.  If you are willing to tolerate a late paying customer, say they pay 90 days late, that’s OK, as long as the payments they do make are consistent.  The better practice is to set your customer straight from the get-go, insisting on timely payment from the very first invoice.
          Waiting beyond 60 days to too much time.  You can wait 30 days, but you must take action before 60 days arrives.  Alarm companies invoice in advance, do how long you wait also depends on whether you’re invoicing monthly, quarter-annually or annually; also how early you invoice the customer.  Most alarm companies will invoice at least 15 days in advance of then the payment is due.  That means you are invoicing on the 15th of the month for a 1st of the month due date.  You don’t get paid by the 15th of the second month, then add interest at the legal rate or the rate specified in your alarm contract.  Some companies have a late charge permitted by the contract so you can add that on too.  Be sure to insist those items get paid, at least after the first time you excuse it.
          What result can you expect from K&K’s collection department?  Approximately 50% of matters are resolved when we first initiate the collection process and before protracted proceedings.  Another 25% get resolved during the collection process, sometimes not until a judgment has been entered and enforcement proceedings processed.  The final 25% may not get recovered, usually because the subscriber has disappeared or doesn’t have the wherewithal to pay the claim.  Keep in mind that your time, as well as your money for disbursements, are on the line so you may want to screen your accounts before sending them for collection unless you have a sufficient flow [5 to 10 cases a month] so that there should be sufficient recovery to justify the collection efforts.
          K&K’s collection department will only accept your accounts if they are on K&K standard contract forms, so get with the program.  If you don’t have the Standard Form Agreements, or if they need updating [more than 2 years old] now is the time to get your contract order in:

To order up to date Standard Form Alarm /  Security / Fire and related Agreements click here:
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301