When to Use a Collection Agency

We are often asked, “When should I place an account for collection?” It usually is when you are unable to collect payment from your customer. They either don’t have the money to pay, they don’t want to pay, or they are not happy with your product or service. Placing an account with a collection agency is usually the quickest process. Collection agencies can usually tell whether or not a customer will pay within 30 days. You can count on Diversified Credit Services’ team of experienced professionals to lower your DSO, improve your cash flow operations, and reduce the percentage of your over-60/90 day balances.

Is Accounts Receivable Outsourcing Right For You?

When to consider A/R outsourcing:

  • Desire to improve the overall efficiency of your Accounts Receivable operations
  • When less than 70% of accounts are current
  • Having to deal with high over-60/90 day percentages on past due invoices
  • Sales volume being impacted due to low customer satisfaction with collections department
  • Increasing levels of inaccurate and/or late payments


Processing Customer Payments

Cash application is the process of applying cash to corresponding open receivables. Simply put, applying a customer payment to an invoice or an unpaid receipt. When you receive a payment, whether it is a check, ACH, wire or credit card, it is very important to apply it against the proper open invoice(s). Many companies struggle with this process due to the lack of remittance that accompanies some payments or partial payments, and this creates a deduction on certain invoice(s). Whenever one of these instances occurs, it should be handled immediately.

Credit Verification Process

When your company brings on a new customer, part of that process should be verifying their credit information to see whether they have the ability to pay according to your terms.


Upon receipt of their completed credit application, you should contact bank and trade references. What you look for from a bank reference is the average balance in the business checking account and whether they have other savings or a line of credit with their bank. When you receive trade references back from the present vendors, you want to determine if they pay them on time, and what line of credit they were granted.


The Credit Check Map

A map of the credit check process for one of our clients


VMS Application

A Vender Management System, often referred to as a VMS, is a web-based application that is exclusively accessed through the internet. This application can provide various features:

  • Placing orders
  • Submitting invoices
  • Obtaining invoices
  • Tracking orders
  • Monitoring invoices