The Complete Guide to Professional Collections

Collections doesn't have to mean angry calls and lawsuits. With SMS + compliance, you can collect more while keeping relationships intact.

When to Escalate

Collections Timeline:

Day 1-7: Gentle reminders
Day 8-14: Follow-up with urgency
Day 15-30: Formal escalation
Day 30+: Consider collections agency or legal action

SMS Escalation Best Practices

Stage 1: Friendly Reminder (Day 1-7)

Hi [Name], quick reminder about the $[Amount] invoice from [Date]. Here's the payment link: [Link]. Thanks!

Tone: Friendly, assumes good intent

Stage 2: Professional Follow-Up (Day 8-14)

Hello [Name], your $[Amount] invoice is now overdue. Please complete payment by [Date]: [Link]. Let me know if you need help.

Tone: Professional, specific deadline

Stage 3: Final Notice (Day 15-30)

Hi [Name], your invoice is now 30 days overdue. Please complete payment here: [Link]. If unpaid by [Date], account will be reviewed for collections. Let's resolve this quickly.

Tone: Urgent, mentions consequences

Legal & Compliance Basics

CRITICAL COMPLIANCE RULES:

Always allow STOP opt-out - Federal requirement
Document every message - Maintain audit trail
Respect calling hours - 8 AM - 9 PM local time
No harassment - Max 1 SMS per day for collections
Accurate information only - No false threats

Offer Payment Plans Before Formal Collections

Before sending an account to collections, offer one last option:

[Name], I want to help you resolve this $[Amount] balance. Can you pay $[Partial] now and set up a plan for the rest? Reply YES and I'll send details.

Why it works: Customers prefer payment plans over collections. You get something instead of nothing.

When to Use a Collections Agency

Consider professional collections when:

Invoice is 60+ days overdue
Multiple attempts have failed
Customer is unresponsive
Amount is large enough to justify the cost

Typical collections agency fees: 25-40% of recovered amount

Alternative: Legal Demand Letter

For amounts over $2,000, consider a lawyer-drafted demand letter before collections. Cost: $200-500, success rate: 60%+

Preventing Collections Issues

Get Deposits Upfront

25-50% deposits reduce late payment risk by 80%.

Screen New Clients

Ask for references, check reviews, require payment terms acceptance in writing.

Use Clear Contracts

Include payment terms, late fees, and collections clause in every contract.

Act Fast

The longer you wait, the less likely you'll collect. Start follow-ups on Day 1 after due date.

Professional Tone Example

Always maintain professionalism, even when escalating:

Hi [Name], I understand cash flow can be challenging. However, your invoice is now significantly overdue. I'd like to resolve this amicably before escalating further. Can we schedule a quick call to discuss payment options? Please let me know by [Date].

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