Reasons to Delay Turning Delinquent Accounts over for Collection

“To turn over or not to turn over, that is the question.” – Willy Shakespeare, Credit Manager

Every experienced credit manager knows that the longer you wait to collect a delinquent account, the less collectible it becomes. It’s a catch 22. If you turn it over too soon and the agency quickly collects it, then you might feel you didn’t do enough and if you just tried a little harder you might have avoided the collection cost. On the other hand, if you delay turning it over and the agency fails, then you may have waited too late to place the account. Or, if you turn it over and the agency fails, then you may have been vindicated for turning it over, but you still don’t have your money.

So old collection adages aside, why is it really that delinquent accounts are less and less likely to pay you? Let’s look at some possible reasons.

  1. Other creditors may be more proactive in placing the same debtor for collection and have elbowed their way into your customer’s mental and financial world before you do. Do you want to wait in line behind other agencies or do you want to lead the charge and get there first?
  2. Every day there is a reset button in business. Monies your client had on Friday could be gone for many reasons on Monday. Projects get cancelled. Loan applications are denied. Their A/R isn’t getting paid. Unexpected operational expenses take priority over certain bills such as yours.
  3. Bankruptcy. Chapter 7 , 11, 13.
  4. Sudden marketplace changes – the shale oil boom was replaced by the shale oil bust.
  5. Government regulations or environmental laws that negatively impact certain business products and services.
  6. Your customer was purchased or acquired in an asset only sale.
  7. Co-mingling of funds with other business interests so funds earmarked for you went elsewhere.
  8. Banks calling in loans or liquidating assets.
  9. Poor business management and low employee morale causing a business crisis.
  10. Cyber attack on your customer’s computer system paralyzing their operation.
  11. Transfer of funds to other personal interests, such as gambling, drugs, and women.
  12. Health – business owners and key personnel get sick and some die leaving the business in disarray complicating the management of company monies.
  13. Weather – hurricanes can create flooding and damage to business structures such as in Texas, Louisiana, and Florida.
  14. Fires – destroy large swaths of territory such as in California disrupting personal lives as well as their businesses.
  15. Government tax bills including payroll taxes have deadlines and consequences that may override your bill.
  16. Frozen operating accounts by the IRS.
  17. Lawsuits – your client may owe money due to lawsuits and judgments.
  18. Projects that don’t materialize after purchasing materials in advance.
  19. Arrest and incarceration for criminal charges. Being in jail for any period of time will jeopardize a business’s ability to pay bills or even continue.
  20. Family illness or tragedy – can easily compromise the principal’s ability to successfully manage his or her business.
  21. Divorce – business partners who divorce can easily turn a company upside down and jeopardize its viability.


Unless you have a crystal ball or can see what truly is going on behind your client’s financial curtain, every additional day you delay taking third party action, reduces your chance to ever see your money again.

If you’re ambivalent about a particular account feel free to call us to discuss. We can either do an asset and liability report to obtain additional financial data or if you don’t want to delay we can begin our due diligence and set it up for immediate collection activity.

Our goal is to give you an unfair advantage by increasing your chances of seeing your money in your bank account and not have it remain in your customer’s bank, forever.