5 Reasons Stopping You From Hiring A Debt Collector – And Why And When You Should
Collecting debt is not easy. As a business owner, you’ve got your business to run, and dealing with unpaid invoices on top of that can be a drain on time, money and, ultimately, your patience. Simply hoping that the debtors will eventually pay up is not an option – while you wait, their debts may be mounting. Should matters reach a point at which they file for bankruptcy, there might be nothing for you to collect anymore.
A simple way to overcome the hassle of chasing late payments yourself, preserve your resources, and safeguard your interests, is to hire a debt collection agency. You might already have considered hiring a debt collector to take this troublesome task off your hands, but something has always stopped you from actually contacting one. Here are the most common reasons why businesses fail to hire a debt collector when needed, and why you should engage one to ensure you get paid:
1. My debt is too small
A common concern is that collection agencies only deal with ‘big debt’. You might feel that your debt is just not large enough and that most debt collection agencies won’t take it on. Consider this: if you believe that the debt has a significant impact on your cash flow and your bottom line, that means it is not too small for you. To chase this debt, you might be spending considerable time and resources; outsourcing this task to a specialised debt collector may reduce your expenditure on both, ensuring that it won’t cost more to cash in an invoice than it is worth. Many professional collection agencies have a ‘no debt too small or too large’ policy, because they know that if they gain your trust as a satisfied customer, you may return to them when you have bigger debts to chase. Debt recovery is an industry where long-term partnerships are forged, and trust is vital to this end.
2. Debt collectors are too expensive
Hiring a debt collector is not an expense if it brings results – it is an investment. The alternative might be never seeing that account receivable paid. After all, an unpaid debt is of no use to you until, and unless, it shows up as cash in your account. When considering whether it’s worth hiring a debt collector, evaluate how much you are willing to invest to see that late payment finally come in. Reputable debt collection agencies do not charge hidden fees, and may be able to provide a free debt assessment before taking on the job. In fact, successful collection agencies operate on a commission-only basis. Rather than charging a flat fee, they take a percentage of the funds recovered and provide a ‘no collection, no commission’ guarantee. This ensures that they are strongly incentivised to get you a positive return on your investment.
3. Dealing with a debt collector is too time-consuming
Many business owners consider time to be their most precious resource. Chasing late payments is often a slow, tedious process that uses up your work hours and hurts your productivity. Have you considered how much of your time you’d free up by outsourcing debt collection? You might feel that you’re too busy, or that hiring an outsider might involve a long handover process. Not so – professional debt collectors have years of experience in their field, and will be able to jump right into the situation. A professional will hit the ground running, picking up where you left off. In addition, a respectable debt collection agency will allocate a dedicated account manager who will be your, and your debtor’s, single point of contact. This guarantees a personal approach while avoiding double work or confusion. Hiring a specialised debt collector to do all the follow-up and chasing for you can dramatically enhance your productivity, allowing you to focus on what you do best – your job.
4. Debt collectors are too aggressive and will scare my clients away
You may have heard stories of debt collectors harassing debtors at work and at home, and are worried that if you hire a collector, they will do the same and scare your customers away. You probably know from personal experience that staying professional and level-headed while talking to a late payer who isn’t willing to cooperate can be a challenge, to say the least. Naturally, you don’t want to risk destroying the hard-earned trust you’ve built with your customer base by outsourcing the debt collection process to an aggressive or unprofessional third party.
Such concerns can be well founded, so it is essential to choose a debt collection agency that holds its personnel to the highest standards of service through every step of the collection process. A good debt collector will strike a balance between being assertive and proactively finding solutions that help your clients pay their debts. Superior communication skills and effective negotiation techniques are key personality traits of a successful debt collector, and can increase recovery rates while maintaining your customers’ loyalty to your business. Besides, outsourcing the process of debt recovery may help preserve your business’ integrity in the eyes of your debtors. Outsourcing this delicate process will shield you and your employees from having to deal with problematic customers, and avoids damaging your business’ reputation. By choosing a professional debt recovery agency, your delinquent accounts can again become loyal, paying customers.
5. I don’t really need a debt collection agency
Did you know that the longer an invoice goes unpaid, after its due date has lapsed, the less likely it becomes to be paid at all? If you have been following up with your debtor for several weeks without tangible results, or their payment promises have been consistently broken, it may be the right time to ask a debt collection agency for help. Debt collection professionals have tools that you don’t, and because they specialise in their job, they can collect debts that you may not have been able to.
Another aspect to consider when hiring a debt collector concerns respecting the laws that regulate debt recovery. There are numerous guidelines to follow, the infringement of which may result in hefty fines or even the loss of the right to collect the debt. Taking a DIY approach to delinquent debt collection without proper know-how may prove to be a thorny business. A reputable collection agency will offer legal protection to your company, avoiding the risk of you or your personnel contravening debt collection laws you are not aware of. It is advisable to hire an established, reputable agency with highly trained personnel, and an existing customer base to attest to its expertise. You will also benefit from knowledgeable advice on best practices, such as how to streamline your accounts receivable process, and when to refer a matter to the professionals.
Hiring a professional collection agency can improve the health of your accounts by streamlining the collection process for you, reducing your costs and avoiding damaging friction with your debtors. It is vital to choose a reliable, well-established agency that can guarantee integrity and transparency in their practice and their fee structure. Pro-Collect has been helping clients recover their debts for over 35 years, working to the highest standards. We believe that the measure of our success is the success of our clients, and our loyal customer base is a testimonial to our integrity. If you are thinking about hiring a debt collection agency to help you with your unpaid invoices, do not hesitate to contact us. Our specialist team will be happy to provide you with expert advice and work out a plan of action for your particular situation.