Franchise Times
This Side of the Law: Franchisees You Don’t Wanna Know

August 2003

FINANCE: A Line on Collecting Debt Online

The check isn’t in the mail. In fact, there’s been an entire summer vacation between the time the services were delivered and the final notice was ignored. What are the chances of getting the money owed you?

It’s easier than you think, according to Jeff Cronrod, president of Fidelity Information Corp., parent company of a new Web site, www.olddebts.com, an online collection agency that charges a flat fee, rather than a percentage.

Collecting overdue bills, Cronrod says, is often perceived as an unwanted hassle, unless the amount is significant. Letting debts slide, however, is the same thing as letting the customer or client steal from you.

“You deserve to be paid,” Cronrod sys, “but I don’t think a lot of franchisees have the time or expertise to do collections.”

Too often companies rely on the person who sold the services or product to do the collection calls. “The personality of a salesperson is different from that of a collections person,” he says. It’s also hard for salespeople to remain in a positive selling relationship with someone they may have just embarrassed by asking for last month’s check before this month’s shipment could be sent.

The problem with not going after money owed you, Cronrod says, is that word gets out that you’re soft on credit. “It’s a double-edged sword. You want to be known as someone who’s fair,” Cronrod says, but at the same time, you can’t let your business slide. And for franchisors, letting one franchisee skate could mean that the rest of them start lacing their roller skates.

Olddebts.com could be the answer. Here’s how it works: A company logs onto the site and pays a flat fee for each of a laundry list of services. Among the services offered are a “quick-collect” letter or a series of more aggressive letters, credit reports, credit bureau notifications and a courtesy call to the debtor before the harsher action starts. The traditional collection method takes 40 percent of the money they recover, so trying olddebts.com first makes sense, Cronrod points out.

A letter is sent on the debt collection agency’s stationery with instructions that the payment is to be sent to the company owed the money. Fidelity has the added edge of being able to report the debtor to the National Credit Bureau, something individual companies aren’t able to do. In most cases, the debtor pays, Cronrod says. Those particular cases are known as the low-hanging fruit.

If the low-hanging fruit doesn’t shake off the branch, however, then there are always the traditional collection methods to fall back on.