Debt collection agencies can be a great resource in tackling late payment and bad debt.
But unfortunately, there are still some misconceptions about debt collection services, which can dissuade companies and individuals from using their services.
Here we look at some of the reasons businesses avoid instructing a debt recovery agency to collect overdue invoice and why partnering with the right collections company can actually be an astute business decision.
- It’s too expensive
It’s not uncommon for debt collection agencies to work on a no collect, no fee basis, so you only need to pay once they have successfully collected debt on your behalf. You therefore don’t really have anything to lose by enlisting their services. A reputable agency will deploy the right solutions to recover debt, and the cost once successful will be nominal compared to the amount you would lose if you had to write the debt off as uncollectable, as well as implications on your cash flow the longer an amount remains outstanding. The right team will also be successful in collecting statutory late payment and interest fees – which can go a long way to covering the costs of collection.
- My customers will take offence, or it will damage my brand reputation
A good debt collection agency understands that maintaining harmonious and professional customer relationships is a very important factor to most businesses, and as such they will act on behalf of your company as if it was their own, handling sensitive financial issues courteously and effectively. An agency would organise mediation for any debt collection to reaffirm the customer’s obligations for payment terms, explaining the detrimental impact their late / non-payment will have. Whilst it is inevitable some companies or individuals will take offence to being contacted by a debt collection agency, a professional agency will communicate the reasons why they have been enlisted and affirm the seriousness of the matter, giving weight to the cause and helping give that ‘push’ that some need to come up with the monies owed and ultimately show that you are in your rights to do what you can to get what is lawfully yours. It is however always a good idea to look at your customers who are still resistant and consider how valuable they are in the long run.
- Debt collection is only for large companies
This is not true at all. We work with businesses of all shapes and sizes who refer their debts to us because they recognise that chasing late payment is not an easy task, and one that requires the expertise of a specialist to get a positive outcome. The expertise of good debt collection agencies and their team, will use the appropriate solutions to recover debt, which may differ for a small company to a large company – but with the same level of service and professionalism. If your business is small, it is a hard task to chase late payment, as within your team you may not have the skills or time to do so. So, any size business will benefit from outsourcing their credit control to allow time to be freed up time to concentrate on core business activities, and still get paid which is even more essential for smaller firms.
- It’s only for old debts
We know that the earlier a debt is referred, the more positive the outcome of collection. So instead of wasting valuable time chasing debt for months on end in-house, why not hand it over and see if a debt collection agency has better results? You can even set up an ongoing debt collection facility where the agency will take on any debt which reaches a certain age. This helps to maximise their recovery and remove the time and resource burden on your business.
- Going straight to a solicitor is more effective
Whilst there are certainly some circumstances where using litigation would be valuable, it is without doubt a more costly and arduous route to recovering debts, versus using a debt collection company. A good debt collection agency will prioritise recovering the unpaid sums by working with your customer, preserving your valued relationship, and only use a legal route if absolutely necessary and where a positive outcome is likely, as they have the expertise to know when it is required.
The team at Controlaccount works collaboratively – as an extension of your own business, displaying the same commitment you would expect from your own team. We treat your customers as our own, and we don’t believe in a one size fits all – using a toolbox of techniques to offer a bespoke solution to a business’ needs.
For more information on how we may be able to help with your debt recovery needs, please contact us today.