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PRESS RELEASE

Contact: Noelle Schaffer, Public Relations Specialist

(952) 928-8000, ext. 753, or schaffer@acainternational.org

FOR IMMEDIATE RELEASE

Making the Most of Commercial Collections During Rough Economic Times

(MINNEAPOLIS, MAY 13, 2003) From large corporations to small mom and pop stores, rough economic conditions often mean more delinquent accounts and an unstable business forecast. As the United States continues to struggle with this prolonged recession, businesses of all shapes and sizes are looking for practical means to weather out the storm. According to the International Association of Commercial Collectors (IACC), commercial account credit managers can aid in reducing businesses debt by increasing their recovery rate percentages through tactful and effective in-house collection practices.

“In times of economic hardship and uncertainty, collecting late and delinquent receivables is critically important to laying the foundation for a better future,” said Jim Bessenbacher Jr., IACC president. “By developing an effective in-house plan to recover these accounts and determining the right time to hand them over to a third-party, credit grantors are assisting companies in increasing their chances for a brighter tomorrow.”

Since commercial accounts depreciate more rapidly than consumer accounts, a credit grantor should have a pre-existing collection plan on hand to carry out the billing system. IACC offers this advice when collecting on past-due commercial accounts:

• Develop built-in collection controls at the time of sale, which can often assist in the recovery and help avoid delinquencies. These include such items as sales contracts or a well-defined vendor’s purchase order with conditions of sale clearly spelled out.
• Start early. A credit grantor should recognize that the sooner collection practices occur, the more likely a past-due account will be paid.
• Develop a series of three collection letters to be sent out on 10-day intervals or until the payment is received.
• Don’t use salespeople as collectors. Although it might sound practical in theory, in reality the results are often unsuccessful because of delay, cost and potential resentment.

For every 30 days a past-due account goes unpaid, the chances to make a full recovery decreases by 3 percent. Therefore, credit departments should determine an aging policy and special circumstances on when to turn an account over to a third-party when developing their collection plan. IACC suggests the following guidelines on when it is appropriate to turn an account over to a professional commercial collection service:

If the credit department loses all contact with the debtor.

· If the debtor has ignored requests or has broken payment arrangements.

· If the account has gone unsettled for more than 60 days.

“Choosing a professional commercial collection service to manage your delinquent accounts can be a wise decision,” said Bessenbacher. “They not only represent your organization in a responsible and professional manner, but also have the tools and manpower to provide a satisfactory rate of recovery while maintaining positive client/debtor relations.”

With 215 collection agency members and 142 attorney members, The International Association of Commercial Collectors Inc. (IACC) is the world’s largest international trade association for commercial debt collection professionals. Headquartered in Minneapolis, IACC serves members throughout the United States and in 24 other countries worldwide. Members of IACC recover millions of dollars annually for their clients and provide valuable assistance to credit departments in controlling mounting debts. To learn more, visit the IACC Web site at http://www.commercialcollector.com.