---
title: 3 Ways Employee Collections Can Haunt Your Business
description: It's critical to treat employee clawbacks differently than other collections - and if you don't, there are many ways it will haunt your business.
image: https://keepfinancial.com/hubfs/pexels-olly-3778966.jpg
---

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###### Blog

# 3 Ways Employee Collections Can Haunt Your Business

 By [Keep Insights](https://keepfinancial.com/blog/3-ways-employee-collections-can-haunt-your-business#author-box) | Oct 20, 2023

![](https://keepfinancial.com/hubfs/pexels-olly-3778966.jpg)

There’s a well-known cliche often tossed around in business: Y*ou’ve got to spend money to make money.* There’s truth to that, and each department has its own path from spending money to making money. 

In accounts receivable (AR), for instance, “making money” can often mean chasing down overdue payments.  Overdue invoices have always been an issue and in the post-pandemic world that issue has only grown. Some businesses spend an average of [14 hours a week](https://quickbooks.intuit.com/r/midsize-business/midsize-payments-research/) chasing down late payments.  That’s almost a third of the year focused on overdue invoices. Talk about a time suck! It’s imperative to handle collections strategically and with care so that long-term relationships aren’t damaged. 

And when the debtor in question is a past employee, “handling with care” should be taken up a notch. There are many reasons a recent employee could owe the company, mainly taking a bonus payment in full without staying for the terms of the agreement. The stress of navigating a balance due from a recent employee can have a negative, lasting impact on AR personnel. And if the scenario isn’t handled with care, it could hurt employee morale and the company’s reputation. 

**Here are 3 ways employee collections can haunt your business, and how to avoid them: **

1. **Emotional Vampirism**

Collecting on debt without emotion looks like this: a burly enforcer pushes into the home of someone who owes The Boss money. After a few tense (and likely painful) minutes, the enforcer walks out, unfazed, payment in hand. Taking the un-emotional “it’s just business,” stance is not a good look. In a typical office setting, managing collections from current or past employees can take a heavy emotional toll on AR team members. After tackling something so emotionally draining, it’s hard to be at their best for the other parts of the job. 

1. **A Ghost from the Past**

Let’s say an employee with an outstanding balance leaves the company. Does the fact they’re no longer an employee mean AR is “alllowed” to show a bit of their internal enforcer? Think again. According to the [Harvard Business Review](https://hbr.org/2023/03/the-promise-and-risk-of-boomerang-employees), 28% of “new” hires are actually boomerang employees – or those who left their employer for a new position only to return to the original employer within 36 months of leaving. When a quarter-plus of your recruitment pool is made up of former employees, you want to make sure that group is as happy with the company as possible! 

We know collections in general are challenging. We’re not saying that employee collections are more difficult than customer or other vendor collections, but if customers (revenue) bring fuel to the business, employees are the engine running the whole thing. You need both things for a working vehicle, but remember your employees are the reason you have a chance to get anywhere in the first place. So when it comes to financial conversations you need to have with employees, it’s critical to lead with kindness and empathy. 

1. **Culture Poison **

One thing you can count on no matter how many employees you have – they are going to talk to each other. If someone has a negative experience with management or HR, their colleagues will be among the first to know. That kind of talk can poison workplace culture. Before you know it, you’ve lost valuable trust in your employees, and communication, engagement, and productivity suffer as a result. Remember that customers also care about how employees are treated, so a misstep here could be a blow to your business and brand on multiple levels. 

Treat your employee collections as if they are different from other forms of outstanding payment - because they are. 

Managing employee collections is intimidating enough without the threat of potential “hauntings.”The situation is delicate and high stakes enough to make outsourcing the process very appealing. Don’t settle for just outsourcing -  bring in a solutions team like Keep who can custom-build[strategies](https://keepfinancial.com/compensation-total-rewards-solutions) to handle each unique employee interaction with care and consideration. Your AR reps (and their therapists) will thank you, you’ll maintain positive relationships with your current, past, and potential boomerang employees, and your reputation will stay stellar. Learn more about how Keep can help you manage and automate your clawbacks at [**KeepFinancial.com**](https://keepfinancial.com/collections-clawbacks)

##### About the Author

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