In this episode of ToiletTalk, we sat down with Scott Fisher from A.R.M Solutions. Scott shares tips on encouraging timely payments, communicating with customers about their debts, and leveraging technology to minimize outstanding invoices.
Matt: Hey, I’m Matt here in the ServiceCore studio in today’s episode. Our guest is Scott Fisher. He’s from ARM Solutions. They’re a company that helps operators like you collect on past-due invoices. In this episode, we get down to the basics of how you can set yourself up for success to greatly minimize your past-due invoices, especially as we head into the busy season, you don’t want to miss this episode. So let’s get back in the booth and get this started.
Hey, Scott, welcome to the studio.
Scott: Thank you. Good to be here. I appreciate it, Matt.
Matt: Yeah, absolutely. I’m super excited for this episode today because operators are about to get pretty busy where, you know, in the late spring time and those events are kicking off for portable sanitation operators. Lots and lots of busy work is coming your way late nights and whatnot. And that means an increase in invoices. And we know with an increase in invoices, we’re probably gonna have some customers that don’t pay. It’s a fact of doing business. We wish it wasn’t the case, but that’s how it goes sometimes. So, you know, we’re going to talk about how to greatly reduce and minimize those overdue invoices and how people can set themselves up for success so they can, you know, cut down on those. But first, before we jump into some questions, tell us about what is ARM Solutions?
Scott: So ARM Solutions is a national third-party debt collection licensed to collect in all 50 states. We are privately held. Our corporate office is located in Ventura California that we have offices in Texas and South Carolina. So we cover all three time zones and we’re also bilingual. So that’s very helpful for our national accounts. We have an A plus rating with the BBB because we’re consumer-facing. So that’s important to know that you know that we’re well received, not, not just with our business-to-business clients, but also with the consumer.
We have a strategic and consistent customer base if you will, which is in-home services and environmental services. And so we specialize in things like propane delivery pest management, waste management portalet. Just all those different companies that have routed and subscription based services with low balances, but high volume of transactions and invoices that they’re sending out.
Matt: Cool. So in, in, in a quick nutshell, you guys help people recover some of those dollars that may never get paid.
Scott: So that’s exactly right.
Matt: Ok, so let’s jump into some questions here. So you know what are some of the challenges that operators face when collecting payments?
Scott: The number one key to collections obviously is the earlier you can get to those in the timeline the better. But the challenge is that our customers, you know, our clients they’re busy, they’re trying to run companies and collections in accounts receivable may not be, you know, their core competency. But there’s a lot of things that they can do to improve that internally. So we help our clients in the consult Consultative approach to help them do better with internal processes.
Matt: OK. Well, that is you know, great information. But what end operators do to set themselves up for success? What are some of the best practices that they can put in their business to make sure that they don’t get to a point where they have overdue balances?
Scott: We, we always tell them our clients that early and often in the air cycle is, is important, right? So it really starts at the time of the sale. You don’t wanna avoid discussing payment terms upfront. So you want to be concise and what it is upfront at the time of the sale. You don’t wanna avoid discussing payment terms during the sale. You want to put that in writing for your customers in both the contracts and on the invoices in very specific terms on what your collection policies are, if there’s any additional fees, or interest fees that you charge for late payments, those need to be well defined in, in your contracts and on your invoices.
And then you wanna also gather comprehensive contact information. The federal tax ID number for business to business and a good way to do that is through getting a W9, at the initial part of the sale. Because if down the road, those customers do become grossly delinquent on their accounts, you’re gonna need this information as part of the Consumer Financial Protection Bureau requirement and the federal credit protection requirement for business to business in order for you to do, what we like to call, credit reporting or getting more aggressive when, when people become, you know, grossly delinquent on those accounts.
Matt: Got it. So it sounds like if you’re, if you gotta working with one of the larger companies, you can ask for W9 and kind of set that up in advance. But if they’re working with, you know, I got a bunch of backyard weddings and, you know, send in portable toilets that way. Probably best to just take payment upfront. If you’re, if you’re billing the customer afterwards, you’re setting yourself up for failure.
Scott: Absolutely. Payment upfront COD are all great ways, to make sure that you don’t end up getting behind on all those payments.
Matt: Nice. Ok, so, what are some of the best practices for, you know, communicating with your clients about you know, avoiding past due payments, right?
Scott: So again, early and often is the name of the game. Usually that 0 to 14 day mark, if it’s a 30 day net invoice, it’s a great time to call them, check on how the service was, make sure that they got the invoice. So get in there early, is the best practice.
Then obviously, if they’ve gone up to past the link, what you wanna get them right away. Like again, time is of the essence when it comes to collections. So the first thing we do is make a phone call. If we don’t get through to them right away, we wanna leave a message, make sure and leave a message. And then we can start with what we call a letter or a written demand campaign from that point of which we can provide the verbiage that meets the Consumer Financial Protection Bureau requirements and we help our clients make sure that those written demand notices are written properly. Obviously providing those payment portal details where they can pay you directly. And if you get them on the phone, offering to get them set up on auto-pay is always a very strong method to eliminate the slow and no-pay customer.
Because a lot of times these customers, if they’re, if they’re late on one bill, they’re probably laid on 8 to 10. So your customer, you know, getting in early and often and creating a consequence that doesn’t involve stopping or halting service. Because the last thing we wanna do if we can help it is to stop service. It’s 10 times more expensive to get a new customer than it is to keep the one you got.
So start early during the sales process, and get them early before it bubbles up. A lot of the times what it does when you get in there early is it bubbles up any of those customer service issues. Like they, they had a problem with your service tech or your driver and when you call them to get payment, they’re gonna want to vent and, and a lot of times once they vent, they’re gonna be able to pay the bill and you’re gonna be able to clean, clean that up and show that is paid in full.
Matt: Nice. Yeah, I’m, I’m hearing a few key things there that I hear a lot from our customers. One is if you’re, you gotta make it easy for them to pay their bill and if you have a, you know, if someone has to cut a check or, or do something archaic, that’s probably gonna slow down the process. If you have a nice click to pay button that’s always really helpful.
And then, you know, they’re communicating often, like you said, you know, maybe it’s just a text message too if you have that site contact that you can say, hey, you know, I wanna make sure everything’s ok. By the way, you know, you’re as much as we do.
Scott: Yeah. And you know, that’s a good point. Emails and texting, you know, the letters are fine for the older generation, but the younger generation, they’re, they’re not opening their mail, they’re, they’re throwing it away, right? So the best thing to do also is to Sprinkle an SMS text with the payment portal link and emails, you’re gonna get far greater returns by implementing those.
Matt: So that sounds like the lighter method, you know, the little, the little nudges. What about what time period is it 30 days, 60 days where you would actually send that more formal letter to cover yourself?
Scott: It really depends on the terms of the agreement obviously, but on a 30-day invoice, it really should start at day 31 with that first very diplomatic approach and that first written demand letter. So the the idea is it’s just a reminder on that first letter.
And then of course, in the 14 to 20-day mark is where you would want to look at sending out notice number two, which gets more aggressive in its approach.
And then by the 61 to 65-day mark, a lot of customers want to stop service, disrupt operations. At that point, you may want to look at using a third-party debt collector just to get the leverage of using a third-party debt collector as opposed to disrupting service. What that’s gonna do is gonna increase customer service retention. It makes you the good guy. It makes the third-party debt collector look like the bad guy, but nobody wants to get the notice from a third-party debt collector and they obviously don’t want to get their credit reported on. So they want to protect that. So it really, instead of the, your customer making the call trying to find, you know, the customer that’s late, it drives communication back to the hauler or the, or to the you know, to your customer. So if that makes sense.
Matt: It does totally, you know, I’m thinking about if you go through a busy season, you’ve got a lot of invoices that are out there and you start to notice, you know, ServiceCore makes it easy for people to prioritize and see. Ok, which one of my invoices are past due? But how do they, what, what are your suggestions for prioritizing which accounts they should focus on first? Is it just the ones that owe them the most or do you actually,
Scott: It’s just that it’s the earliest and the highest balance. Earliest and highest first, then you work your way down the line. So again, early and often is the name of the gaming collections. The longer you wait, the harder it is to collect and the cost to collect that debt goes up. So the higher the balance earlier in the in the in the cycle.
And then, you know, again, when you go out to that 60 to 90-day mark, if you’ve exhausted all internal efforts, you know, we like to say the definition of insanity is doing the same thing over and over again and expecting a different result, right? So maybe it’s at that point, it’s time to explore other options, third-party options to help you collect on those more, more delinquent past due debts.
Matt: Sure, sure. That, that makes a lot of sense. So if I’m, I wonder, have you seen this, is it easier to collect on a larger balance or is it easier to collect on smaller ones?
Scott: Well, you know, most of our clients, that they’re subscription-based services, so they’re lower balances to begin with. What happens though is that we don’t contact them early in the cycle and we don’t find out what the problem is early on. Then that continues to grow instead of one invoice. Now that goes to two invoices, three invoices, five invoices down the road, then it is now a big balance, but it’s much older debt to collect on and it’s much harder to collect on.
So, you’re right, you know again, depending on balance really early is the name of the game in collections. It really doesn’t matter as much about balance size as it does about timing you want to get in early and often.
Matt: Sure that makes, that makes sense.
Scott: We can make and of course, that’s so hard. These days, you know, people are trying to run their businesses doing the collection calls. It’s not the funnest job, but not all people are really experts at collecting. And then of course, they need consultation on, on the legalities of the letters and the verbiage that they’re using, how often that they’re calling. So all those things add up, it makes sense, you know, it makes sense to, to do your research before you start a good collection campaign.
Matt: A lot of our customers, and what we hear in this industry is you’re working with, especially some of the bigger companies, they may have their own, you know, your terms may say, you know, 30 days, but they may have their own way that they’re paying that 60 or some in some cases, it could be even more. How do you balance a good relationship with your customer? But you want to get paid for what you do? And so how is there a softer approach that you would take with some of those larger accounts that, you know, they’re paying you good money, but they may be really slow to pay you?
Scott: Absolutely. Again, it’s all about diplomacy in your approach and in, in your consistency in your approach and obviously, you know, letting them know the terms of the agreement upfront at the time of the sale and communicating that often having that in your agreements and your contracts and on your invoices is very important. So everybody’s on the same page.
But at the same time, you know, your customers are providing a service on time and it’s really not too much to ask that they get paid whatever the terms are. If it’s a 60 or 90-day agreement with a large, with a large customer of theirs, they still deserve to get paid on time and they should, they should have a good collection plan in place even for their most protected customers.
Matt: Got it. I wonder are there relationships that you suggest? You know, is there someone in the company that you suggest? Usually it’s the site contact for portable toilet operators, but should they form a better relationship with those people to make sure that it’s easier to communicate and less, you know, feels like you’re not begging them for money?
Scott: Absolutely. The relationship is, is 100% key, whether it be a field operator or a super, a superintendent or you know, just somebody that you work with closely on a day-to-day basis, that is your champion that can get through to the controller CFO that, you know, they, they can talk to their billing people to make sure that, that those invoices go out, give you a little bit of leverage. Obviously.
Matt: Sure makes sense. What about, what role does technology play in trying to make sure that you’re getting paid on time? And a a lot of operators believe it or not, some of them don’t realize how much is outstanding or how much opportunity there is to go collect on some of the outstanding balances they have versus just, you know, no visibility and not knowing where those things are.
Scott: They don’t. And a lot of them don’t have time to dig into actually making all the phone calls that are needed and reaching out to those customers to try to or help them get on auto pay a lot of the time, the auto-pay features that you provide in service core and those things that you do internally in your software, help your customers get paid on time and quicker. That technology that you’re providing to your customer is invaluable.
So it really, it boils down to creating a good plan internally with their accounts receivable team to sit down and carve out the time to make those phone calls and those emails and those texts doing those things to to help get as many of those customers on auto-pay as possible. That’s going to clean up the AR and help the AR roll down the line considerably. So there needs to be a good plan in place using all communication efforts, what we call multi-channel communication.
Matt: Got it. I love the approach. It’s like sometimes people, I mean, everyone’s busy and they may not see it in one place. But if you’re providing them with an easy way to pay their bill and you have a way whether it’s you’re using ServiceCore, another provider or even spreadsheets. But if you just have a way to make sure that you’re, these are all the outstanding balances and make sure that your billing, people are trying to follow up before you have to turn it over to someone.
Scott: I say it starts at the, it starts at the sale, but it also starts with that first invoice. Those invoices need to go out on time and you need to, they need to be consistent and they need to be accurate. Nothing can, can, can slow down AR more than inconsistent billing or inaccurate billing. So that’s, that’s really the first step, you know, is making sure that those go out on time that are accurate.
And then from there early and often that 1st 14 days, how was your service making those early calls? And did you get the invoice, got it.
Matt: Yeah, you certainly don’t want self inflict 30 60 days because you didn’t send out the invoice. So that’s a big deal.
Scott: Big deal.
Matt: So before you get to the point of, I’m gonna turn it over to a company like ARM Solutions. Can you talk about some best practices is for negotiating? Because we have stories from, some of the people that work for us that were former operators where they ended up spending time to try to, you know, recover some money and they would make deals or payment plans with people and they recovered an enormous amount of money just doing that. What are some of the strategies there that you would share that people can use?
Scott: Absolutely. So negotiation is a big part of what we do and what we call a contingency or commission-based collection, what we call phase two, all those debt collectors that are in that are have at least five years of experience and certifications and negotiation, right? So just there’s so many YouTube videos and self-training dialogue outlines for negotiation to do, to do the homework on that and to really hone your negotiation skills. I’ve been in sales for, for 30 years now and I could tell you that negotiation skills are, are part of everyday life. And if you’re uncomfortable with working on payment terms, negotiating different timelines for payment then it, it’s probably a great idea to do a little research on what best practices for negotiation.
Matt: Got it, got it. Make makes perfect sense. Ok, so we’ve kind of covered the basics of, you know, you’re communicating often, you’re setting those terms and conditions up front and making that, you know, very transparent and visible. You’re giving friendly reminders, you know, especially as they get into the past 30. You’re reminding them before that that comes. So that way you’re setting yourself up for success. And if you have exhausted all options and you need to hire someone like ARM solutions, that’s, that’s something you can go down and explore as well and we’ll put some links by this video. So if people want to work with you all, they’ll jump over there. But lastly what is there anything else you want our audience to know about, you know, collections or the process that they a key takeaway?
Scott: I do. So it most, most companies don’t want to deal with third-party debt collection for three reasons. One is the very high cost to collect. Usually, debt collectors are charging anywhere from 25 to 50% commission. They’re alienating the customer because it’s basically a write-off for them at that point. And when a third party debt collector takes over that account, you lose all communication.
And then the third part of that is that when they do collect the money, they’ve skimmed off the top of the, of the highest balance accounts, the easiest ones to collect on and you don’t even know what accounts that were collected on because they keep your money. Right.
So that’s why we, that’s why we have been in waste management in the service industries so long other collection agencies hate ARM Solutions. And the reason is that we have a very low cost to collect is less than 10%. All money get remitted directly back to our customers. So we don’t hold any of their money and all communication gets sent directly back to our customers. So it improves customer service. It helps with the AR roll all the way down the line and it, it allows our customers to maintain their relationships with their customers and not have to write off stop service, do reroutes because of stop service. It just, it helps efficiencies all the way down the line when you use this in a very what we call diplomatic approach in phase one, flat fee debt collection is what it’s called.
So we do the letter campaign which is three letters, phone call, live, human phone call, email with your payment, direct payment link and text with your direct payment link for 60 days, all for less than 10% on the dollar to collect. And so it’s, it’s a fantastic service. Not many companies are licensed in all 50 states to collect and even fewer are doing what we call multichannel flat fee collection. So I look forward to talking to your clients about that in the future.
Matt: Yeah, absolutely. It sounds great. I mean, if you, if you’re an operator that just doesn’t have time to focus on this, but you’re looking at your outstanding balances and there’s a lot of money to collect
Scott: It helps them collect more than less. It bubbles all those customer service issues up at the top and because of our diplomacy, our clients use us sooner in the AR timeline. So it allows them to use us sooner. Things don’t bubble up. It lowers, reroutes and scheduling changes because of stop service and it really stops or slows down the writeoffs.
Matt: Nice. Nice. Well, it sounds like an amazing solution to use. And, and Scott, I just wanna thank you for coming on ToiletTalk today. Our audience got a lot of great pearls to take away and hopefully they set themselves up for success while they’re going into busy season. But you know, if we know people aren’t gonna pay and then hopefully they’ll use someone like you guys.
Scott: We appreciate that very much. Thank you, Matt so much.