If you own a company that has Accounts Receivable, you’ve long been aware of the fact that QuickBooks Online’s App Ecosystem has been missing a way to collect on your aging debt. Sure you can try to collect it yourself, or hire someone to do it for you, but that’s expensive and takes up a significant amount of your time. At the 2015 QuickBooks Connects Hackathon, we got a first glance at a solution: Collbox. Two months ago, Collbox was added to the Intuit App Store. Collbox has quickly gone on my top 5 list for apps for QBO. Yes, really, it’s that good.
Depending on the industry you or your client are in, collections could be uncommon, or it could be someone’s full-time job. One of our clients does advertising, which is well-known for a high number of delinquent clients. It’s not exactly something you can provide C.O.D (Cash on Delivery). The firm had a collections person part-time, but the company’s ability to “put the screws” to the account that was in delinquency was limited. You couldn’t readily report them to the credit bureaus, you could only call or email them so much, so over time, Accounts Receivable started adding up. Now you face over 100k of potentially bad debt. Sad Face…
This client’s Accounts Receivable was in need of an update to their collections process. Two Apps were implemented for the setup; first Bill.com was added to automate invoicing and reminders for payments. This client has hundreds of
customers, so manually sending reminders and statements via email and mail was not exactly cost-effective. By using Bill.com we were able to send reminders, and once the account became overdue, three emails/letters of various intensity to collect on the payment. The third letter/email was a demand letter, threatening to send the customer to collections if the balance was not paid in 10 days. Another great feature of Bill.com was the ability to send letters and emails. Many of the client’s customers still preferred paper documents (BOO, HISS).
Finally, if a customer still has not paid over 30 days past the due date, we would give them a call or two. Still, if the customer has not paid, Collbox was the last option.
How Collbox Works
So Collbox doesn’t actually do the collections for you. In reality, they are a referral network that vettes collections agencies to do the work for you. It is worth noting that Collbox is free (yes, that’s right, there is no monthly fee). So how does
Collbox make money? They receive a referral fee from the collections agency you are sent to. Pretty clever right? It’s a win-win across the board. The collections agency gets access to Intuit’s massive network of AR, and you get access to a collections agency you can trust (because there are a lot of sleazy companies out there).
Once you have determined that an account is getting the boot, you simply go to Collbox and send the client to collections (They are able to be sent after 30 days). At that point you provide them with some information (Commercial/Consumer, Are they still in business, Do you want to keep your relationship with the client, what is the minimum you’d accept) , and they provide you with an offer which you can choose to accept or not. They tell you what the collection agency’s rate is (usually between 25-40%), what the recoverable amount is, and what the odds of collection are. From that point Collbox’s job is done, and the collections agency will likely give you a call. It’s that easy.
So in the end, we have sent about $75,000 in receivables through Collbox. Let me say the experience has been wonderful. I have worked with two agencies, both incredibly nice, professional companies that keep me informed. I have an excel on hand that I keep track of who all of my collections are with, and what the status is. Both of them send me client statements, so I can see what is happening with each account. They also tell me up front which accounts are uncollectible. Either the client has gone bankrupt, or their Private Detective can’t find them. Yes, I said Private Detective. So far, as previously stated, we have sent 75k to collections. The collections agency claimed the statistical average for the age of our debt was 12%. In two weeks they have collected on just under $17,000. That’s 23% in a very short period. So how do I feel? Well… I’d say the image on the left just about sums it up.
What I hope for
Collbox is still pretty new, so a lot of the functionality still isn’t there. That is not to say, however, that Collbox is not worth using. Oh it is, it so is. It’s wonderful. It is absolutely 1000% worth it. In the future it would be really fantastic to see an integration with both QBO and Bill.com, so payments received will post to both apps. Currently I have to enter the information myself (which is fine). It would also be great to see the collections information under each client under “collecting” and even more so, an update from the collections agency, so I can get rid of my excel all together.
Like I said, Collbox is still largely in its infancy, however, that will not last long. As soon as Pro-Advisors realize the value of this service, it will be used with the same frequency of Hubdoc or Expensify. You can find out more about Collbox on collbox.co. They are also on Facebook, Twitter and Linkedin