What does a debt collection agency *actually* bring?
26/04/2019 / Comments 0
Are you considering using a debt collection agency, but are unsure what they can do that you haven’t already tried in house? We’ve broken down the top ways that a debt collection agency can make a difference when recovering invoices.
When you have an overdue invoice, it can be a struggle knowing what your next steps should be to get the best result. For many companies, it can be difficult to know how long to keep chasing a debt in house before you seek expert help.
You can read ‘When should my business consider using a debt collection agency’ to get some pointers about when it might be suitable for your business to turn to a debt collection agency. But without understanding what it is the agency will really do about your debt, it can still be a daunting step to take.
We’ve highlighted some of the top areas where debt collection agencies like Hilton-Baird Collection Services can make a real difference to their customers.
Experience and knowledge
The first and most obvious benefit is the experience and knowledge that debt collection agencies can bring. Just as you are an expert in your industry, they have a large amount of expertise in recovering aged, current and disputed balances.
Their experience means their staff are better equipped to hand tricky debtors, as they’ve seen it all before and have a much higher chance of recovering the debt.
For instance, they’ve probably heard just about every excuse as to why an invoice is outstanding, and can quickly gain the information they need to verify the validity of that excuse and set about overcoming the problem.
The best debt collection agencies will always try to approach collections in a way that will cause the least amount of friction with your customer, preserving your relationship wherever possible. Often, when chasing debts in house, it can alter your relationship significantly, and may mean that it will not be possible to do repeat business with the customer in the future.
Although it may be the case that you don’t wish to do any more business with a customer who has allowed payments to become significantly overdue, it is still in your best interests to maintain a civil relationship with them and handing the collection process over to a third party can in fact be a good way to do this.
Especially when it’s written into your terms and conditions that any invoices past a certain point will be outsourced to a debt collection agency, it means you can continue to play ‘good cop’ while your collections partner effectively assumes the role of ‘bad cop’, given the authority agencies can bring.
Advice and help escalating to legal recovery
There are times when it may be necessary to escalate a debt further and begin legal proceedings against a debtor. A debt collection agency will be able to offer you advice on this and will also be able to issue a county court money claim on your behalf, whilst handling all the necessary admin.
This can save a lot of headaches and stress for a business, and having the expert input should also ensure that you don’t have to go through unnecessary, lengthy and sometimes costly legal proceedings.
Many debt collection services are charged on a success basis, where the agency earns a percentage value of any debt collected. This means that they are incentivised to get results and ensure they are focused on recovering payment from your customer.
This can be encouraging for businesses as they can feel assured that the agency will be just as motivated to collect the debt as they are, as it is in both their business interests.
When tackling an outstanding debt, not only can it be a difficult conversation to have with customers, but many businesses and employees simply don’t have the background knowledge into their legal rights and what they are and are not allowed to do.
On top of this, when dealing with something so critical to your business, it can be easy for tempers to flare up which could make an already difficult situation a lot harder to navigate.
When using a debt collection agency, you can feel sure that all collection techniques will be fully legal and that a deep knowledge of the law and your rights can be used to achieve the optimum outcome, in a calm and professional manner.
What have your experiences of in house debt collection taught you? Would you consider using a debt collection agency in the future? We’d love to hear your feedback in the comments below!