Ask 100 business owners why they don’t refer their overdue accounts to a debt collection agency sooner and 72 will tell you the same thing… they can’t stand the thought of someone else (i.e. the debt collector) gorging on money that’s rightfully theirs.

You see, when you engage a debt collector not only will they charge you an upfront fee to take on the debt, they’ll almost invariably also charge you a substantial commission on every cent they recover on your behalf. Now while the standard rate is around 20% some of the bigger firms will slap you with commissions as high as 45%, taking all the cream and leaving you with crumbs!

However, with just a few keystrokes on your computer you can instantly immunize your business against such fees forever more .

So what’s the magic cure?

Simple!

Just erect a notice visible to your customers that says:

“Unpaid Accounts Will Incur Late Payment Fees And Collection Costs”

The second you display this notice, form that moment on any new debts you refer to a debt collector, all fees and commissions clocked-up to recover that money will be passed directly on to your debtor. Which is the way it should be. After all, they’ve defaulted on payment. They’re the ones who should be penalised, not you. In this way you won’t be penalised a cent on all money recovered.

As simple as this secret is, there are 3 important points to keep in mind…

1. The Wording Must Remain Unchanged.

Your notice must display the words “Unpaid Accounts Will Incur Late Payment Fees And Collection Costs” If you change this in any way chances are you’ll compromise your right to charge penalties and pass on collection costs. So stick with this phrase and you’ll be covered.

2. Location Is Critical.

To confer the power to legally pass on collection costs to your debtors this notice must be posted where your customers can read it BEFORE they purchase your goods or services. So if your customers can do business with you without actually stepping foot on your premises, you will not possess the right to pass on collection costs if you only displaying this wording in your office and no where else.

A good example is a carpet cleaner or pest exterminator. If this notice is not displayed where the home-owner can see it before any work is commenced then should the home-owner subsequently default on payment the trades-person can not pass on collection costs. Whether the home-owner sees the notice or not is irrelevant. What’s important is that this wording is displayed where it can be seen before any work is commenced.

Furthermore, if you write quotes or extend credit then the respective documentation must include this wording. Similarly, if you conduct business online then your website must also include this statement.

3. Pre-Notice Debts Are Not Covered.

Displaying this sign today does NOT give you the legal right to pass on collection fees for existing invoices. So if your current Terms of Trade do not allow you to pass on collection costs, putting up this sign will not miraculously allow you to do so on existing overdue accounts.

Admittedly it’s tempting to say, “What the heck. I’ll put my sign up today then send my existing bad debts to a collection agency and no one will be the wiser.” Now while you might get away with it, if you get caught you’ll be up for a $200,000.00 fine! My advice: put up the sign today and accept the fact that you can’t claim costs on your existing accounts.

Take Home Message: Protect what you work so hard to build. Display this notice where your customers can see it and know you won’t be fleeced ever again to recover what’s rightfully yours.