Do you have outstanding accounts that have been difficult - if not impossible - to track down? How much effort can you (or your team) put into finding someone who owes money, without wasting valuable time? Do you even know where to start if you have an incorrect phone number? Read on to learn about skip-tracing and how it can benefit your business.
What is skip-tracing?
Skip-tracing is the process of tracking down individuals. As it relates to collections and accounts receivable management, skip-tracing is the process of locating debtors whose contact information is no longer accurate. It can run the gamut from checking phone books all the way to searching a massive amount of publicly and privately available information. Often, companies have to purchase access to this information, or hire a collection agency that already has access as part of their services.
As sure as the sun comes up, skip-tracing will continue to be an important part of the debt collection process. While the manner and method may change over time, there will always be a need to find a debtor’s contact information. One interesting change in recent years is that since more consumers are ditching landlines in favor of mobile phones, a cell number is becoming an increasingly reliable path to find someone...and therefore open a line of communication to improve your accounts receivable management.
How will my company benefit from it?
The ability to locate a debtor means that you actually have a chance to recover debts that are owed. Otherwise, if someone ‘skips’ town after a procedureyou’ve performed, or after you’ve loaned them money for personal or educational reasons, you may never see that money again. While finding a person does not automatically mean you will recover the entire debt, it does mean that you might get something back...you miss 100% of the shots you don’t take, after all.
So, why do I need a collection agency?
Unless you have an internal collections department that is proficient with skip-tracing, your employees will be spending a lot of time tracking people down, and that time could have been better spent elsewhere. Also, getting access to contact information in the first place (beyond what you can find in a phone book) can be costly in terms of time and money. In many cases, it is cheaper to outsource your collections than to have employees trained in skip-tracing as well as their primary duty. Even if you have an internal collections department, consider what you are paying for full-time employees in terms of salary or wages, building space, health insurance, and other benefits. One important note is that most collection agencies are not paid unless they collect on a debt for you, so it’s a mutually beneficial relationship.
Skip-tracing is a necessary skill that enables businesses and individuals to locate debtors and reclaim revenue. Because the process can be time-intensive and requires some specialized knowledge and access, it is often best to outsource this function. Most collection agencies offer skip-tracing as one of their services - the trick is finding the right one!