Question

At what point should a client be notified that the account will be turned over to a collection agency?

1) 30 days after the last invoice
2) 60 days after the last invoice
3) 90 days after the last invoice
4) 120 days after the last invoice

Answer 1

3) 90 days after the last invoice. A client is typically notified about their overdue account being turned over to a collection agency commonly 90 days after the last invoice. This period allows for attempts at amicable debt settlement and is aligned with fair debt collection practices.

Step-by-step explanation:

When managing overdue accounts, the specific point at which a client should be notified that their account will be turned over to a collection agency may vary by company policy and industry standards. However, common practice is to allow a grace period after the last invoice before taking such action. Notification often occurs at the 60-day or 90-day mark to give clients ample time to settle their debts before being reported to a collection agency. For example, a client may be notified 90 days after the last invoice to ensure efforts to settle the debt amicably have been exhausted prior to involving the collection agency. This tactic can help maintain a professional relationship with the client, while also adhering to fair debt collection practices.