7 Reasons Why You Should Partner with a Debt Collection Agency
Written by Adam Stewart
Debt collection is a job almost every single company has to do at some stage in order to stay profitable and keep the cash rolling. In most cases, companies will either attempt to collect any outstanding debts owed to them on their own, or they will simply write off the losses and move on.
However, there is another option that is becoming increasingly mainstream, which is partnering with a debt collection agency.
If you or your company is struggling to manage delinquent accounts, here are seven reasons you might want to consider before partnering up with a debt collection agency today:
1. Better Chance of Success
It makes sense that a debt collection professional will have a higher recovery rate that you could get internally. Even factoring in the agencies commission, you will still be in front since an agency will have a higher success rate, along with no charge whatsoever on the unsuccessful ones. Win-Win! So, having someone with a wealth of knowledge is always going to produce a better success rate than attempting to manage your own collections.
In addition to more experience, agencies also have the tools in place to track and monitor the progress of all of your accounts without having to establish new procedures like you might have to by doing it on your own.
2. Focus on Client Work
Whilst doing your own debt collection, you won’t be generating any new income for your business. Any amount of time you spend working on collections is naturally going to take you away from doing what you do best in your company, which is generating more income and profits by doing whatever it is that you do best. Debt collection can be frustrating, if this is taking you away from your main job. Passing the collection effort off to an agency is a great way to avoid any frustration or emotional attachment that you might have to a delinquent account or debtor. And a neutral third party will often have a better chance of working out a payment plan as well.
In many cases, companies that we have worked with quickly learned that our contingency fees are often much smaller than the opportunity cost they are forced to charge themselves when they take their focus away from their client work.
3. Locating Missing Customers (Skip Tracing)
We call it skip tracing, but basically, it means locating a missing customer or a customer that has moved or cannot be found. In many delinquent account cases, customers will appear to have completely fallen off the face of the earth, which obviously makes them hard to re-locate. This type of work is easy for us debt collectors, not so easy for you, so it’s a no-brainer that you would give this work to a professional investigator/debt collector.
4. Understanding the Laws
Here in Australia, we have to abide by the ACCC guidelines on debt collection. Having an experienced debt collector in your corner is the best way to make sure that you are always going to fall on the right side of those laws, which can be tricky at times.
5. Handling Disputes
Not many companies realise that a debt collection agency can also handle any contractual disputes on your behalf. A debt collection agency acts as an extension of your accounts receivable department. When a dispute comes up, the burden of proof rests with the company providing the good or service, which means that you need to have all of the specifics of the debt documented and plenty of time to go over them. This can be time-consuming and is best handled by your debt collection agency.
6. Handling Instalments
Another red flag that you should always be looking out for is any type of broken promises. This typically happens when a customer is working with you to get caught up, but then something happens to send them off course. It can also happen when they run a little short one month and offer to make a partial payment.
Once again, an experienced debt collector will be able to gauge exactly how much rope should be given to a customer so that they can attempt to catch up without hanging themselves. Your debt collection agency will also have software and automatic systems in place to handle instalments and/or defaulted payments. They can escalate the matter more quickly than you may be able to do yourself.
7. Escalate Faster to Litigation
Because many companies simply don’t have the time to be bothered with collecting bad accounts, those debts often sit on the back burner for weeks and months at a time. It is very rare that someone builds a contingency plan for hiring a debt collector right into their original business plan. In most cases, it is much further down the road when this necessary step becomes apparent, and most companies react too slowly when delinquent accounts start to creep up.
Outsourcing your debts to a debt collection agency in the first instance, means that they will be able to monitor your debtors much more closely, escalating those troublesome ones very quickly and ear-marking any that may perhaps need lawyers involved. A good agency will also have a litigation team on hand to advise you on these higher escalations.
Not only will teaming up with the right debt collection agency help you collect on what you are rightly owed, in most cases, it won’t even cost you anything, since most agencies work on a “no win, no fee” basis. So, the only question left to ask is, “What are you waiting for?”
Contact a Debt Collection Expert
The longer you spend on unpaid invoices, the less time you’ll have to ensure other customers don’t follow suit. This is where it can be useful to call on the resource of a specialist debt collection agency, as they’ll take on the burden of recovering payment and use their expertise and weight to secure the money you’re owed quickly. Call Debt Recoveries Australia on 1300 799 511 or email us at email@example.com
|About the Author
In 2002, Adam Stewart established Debt Recoveries Australia Pty Ltd, a debt collection agency specialising in the insurance claims industry.
Adam has worked in the fields of motor vehicle insurance and debt recovery for over 12 years, working with some of the largest insurance and debt recovery companies in Australia. Read more