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Monday Morning Memo: The Third Warning Sign Is Like A Category 3 Hurricane, You Need To Be Prepared
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Preparation is essential in the staffing and recruiting business. If you’re caught unprepared, then you might end up in trouble. Clients going out of business is one of these problems that you’re going to have to face. Luckily for you, there are always warning signs. The third warning sign that a client is going out of business is your wakeup call, and you need to be prepared for it.
What You Need To Know About The Third Warning Sign
The third warning sign is when you start realizing that you might have a significant problem on your hands. It is usually when a client is 60 to 90 days overdue. They’ve made promises and a few phone calls or have gone completely silent. You must know everything to know about this warning sign to increase your chances of a successful collection.
You Have Limited Time
Once clients are 60 to 90 days overdue, you have a limited window to collect what they owe. They still can pay you, but with each passing day, they start to lose the ability to do so slowly. Their credit lines are drying up, and you’re not the only creditor that they owe. The worst part is that staffing and recruiting businesses are 3rd tier debt, which means that you’re at the bottom of the priority list.
Credit Card Payments Are Risky
Getting paid through a credit card is not an ideal solution for collecting a debt. Visa and MasterCard are not your friends when it comes to collecting. Credit card money is one of the riskiest methods of getting paid because credit card companies can shift the bill over to you and reverse the payment.
Lawsuits Will Take An Extended Period
One of your options to collect payment from your debtor is to have your attorney file a lawsuit against them. It can be an effective way of collecting. However, it can take a long time before the case can get to a judge. Usually, it takes 9 to 12 months to get through the system into a judge’s hands. However, with COVID having a profound effect on the court systems, you could be waiting over three years before it reaches a judge.
Final Thoughts
Being prepared for a hurricane is essential to keep your home or business from taking any damage. The same can be said of clients that are going out of business. Like an incoming hurricane, there are several warning signs before you get into trouble. The third warning sign that a client is in trouble is comparable to a category 3 hurricane. You must be prepared for it; otherwise, you might find yourself in trouble.
Key Takeaways
- Visa and Mastercard are not your friend. If they are reversing that charge, they are probably behind on these payments. They can shift that bill over to you and reverse the payment when they get into trouble.
- “I have a credit card and I’m safe” that is about the riskiest money you can accept. I’ll tell you how risky it is: we will not take a credit card payment on ANY debt.
- I cannot tell you how many times we have had clients damage their case at the 120 day mark. Use use, don’t us, I just don’t want you to do anything that will damage your case.
- When clients go over 90 to 120 days, understand that you have just opened this Pandora’s box of possibilities and you’ve got a 71% chance of getting paid at 90 days and a 21% at 12 months without having to sue them
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