Collecting Payments from Alarm Subscribers

As this year is quickly coming to an end, it’s time to take a close look at your accounts receivables. Poor paying subscribers who are out of their usual paying cycle may be hanging on trying to make it through the end of the year. These subscribers may be taking care of only essential bills necessary to keep them in operation until they pull the plug on their service. How you approach rising accounts receivables is important for the health of your business. Generally, nice guys finish last in this scenario.

What should you watch for? You know your subscriber’s payment history. It’s when the subscriber falls out of routine that you need to be concerned. Even a subscriber who pays in 10 days needs to be contacted if the payment is not made in accordance with the payment history. Why the change in payment routine? As the failure to pay goes from 30 to 60 to 90 days, you have to become more aggressive in your efforts to get paid. Contact the subscriber. Avoid unpleasant conversation, and don’t threaten. Your initial contact should be to find out if payment has been sent, why not, and when can it be expected. Inquire how the subscriber’s business is going, and listen to the response. A subscriber crying the blues may not be crying wolf this time. If there is any indication that the subscriber is winding up its business or considering bankruptcy, or explains that he or she can’t make ends meet, it’s time to get aggressive — unless you’re willing to let the subscriber go.

If you are using the Standard Form Contracts, you have a security interest provision that permits you to file a financing statement, effectively turning you into a secured creditor. That distinction may make a difference if the subscriber files bankruptcy or tries to or does sell its business or assets.

Declare the subscriber in default, terminate services and pursue your contract rights. Being aggressive means getting started. The early bird catches the worm. (Your subscribers would say the worm catches the bird). As long as you don’t make it personal by getting nasty your subscriber shouldn’t think of you as a “worm,” or worse. My very first alarm client had terrible collection results and he couldn’t understand why I was collecting for all the other alarm companies but had such a hard time with this cases. Well, before he sent me the cases he tortured and abused the subscribers. By the time I got involved I frequently heard “I hate your client and I’d rather spend money on legal fees than pay him a dime.” Don’t make it personal. Being nice but firm will achieve better results.

Starting lawsuits will also achieve better results. The first to start collection efforts are more likely to get paid. Debt and creditors can be viewed as an iceberg. If you’re one of the first to take action you’re on the tip of that iceberg, but there’s plenty below you and once they get started the subscriber will have no choice but to shut down; nobody gets paid then.

Don’t think that by starting collection action you will disenfranchise your subscriber. That’s not typically the result. It’s the telephone calls and threats that turn a subscriber off, not your efforts to get paid. Again, don’t make it personal. Your subscriber understand that you’re owed money and may even want to pay. Creditors that are more insistence and aggressive get priority.

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