Friday, 11 December 2015

7 Reasons Why Smart Businesses Love Debt Collectors

The business world is a fast-moving, forever changing place, which can easily get out of control if you don’t keep a steady flow of cash pumping through your operations. Every now and then, a business may stop honouring its debts, and the life blood (or cash) of that business will stop pumping back to its creditors.

When it comes to making the most of your assets, there’s no place like your company’s cash box to keep your treasured cash, but should your accounts receivables be outstanding, then hiring professional debt collectors should be right up there on top of your list of options.

Some businesses will only call upon the services of debt collectors as a last resort, while others have their number on speed dial. To some, it’s comforting to know that qualified professionals are dealing with the unpleasant aspects, and that both parties will be allowed to save face, and possibly collaborate again in the future. Others still prefer to take matters into their own hands.

Whichever category you fall under, there are a few facts to consider when dealing with debt collectors, some positive and others less so. Outsourcing business debt collection can do as much harm as good if you don’t choose the right agency for your business. Here’s what it all boils down to when it comes to dealing with debt collectors:

Cons

1. Cost
Delinquent accounts are settled in exchange for a fee, and different agencies practice different rates. Some contingency fees can go as high as 50%, or if you pay part of the costs 15%, of the amount due, but even so, it’s better than a losing 100% if you do nothing to collect the debt.

2. Scare Tactics

Even if you’re not keen on keeping an account after the dues are settled, that’s no reason to use debt collectors who practice intimidation rather than co-operation as a recovery tactic.

3. Responsibility

As original creditor, you may be held responsible for the way the debt collection agency carries out its investigations and negotiations, and each country or state comes with its own regulations and legal requirements for debt collection. Therefore, look for an agency that holds a credit license, is a member of the Institute of Mercantile Agent and or any other regulatory body.

Pros

1. Delegation

Dealing with debt collectors is much simpler and less work intensive than dealing with debtors individually. They specialize in recovering your assets when all else fails, and they’re not likely to give up without a fight. While it’s true that they may not be successful in recovering all of the dues, it’s often the case that they are your only option, especially if the debtor is hard to locate, or is keeping assets hidden.

2. Time & Money

Collecting debt is a drain on your resources, including personnel. It can be a long, strenuous and time-consuming process, which takes its toll on employees’ time and morale. When dealing with debt collectors who take over debt recovery on your behalf, the staff enjoys more time to attend to the company’s core activities, focusing on making the business grow.

3. Follow-Up

Debtors with a history of not honouring their debts can be hard to spot, especially since owning multiple businesses, buying off-the-shelf companies or even having shell companies is perfectly legal. An agency that specializes in business debt collection will recognize the signs of serial debtors and follow up on their outstanding payments, alerting you if need be.

4. Cash Injection

It goes without saying that the faster you’re paid, the better your cash flow will fare, and you’ll be able to reinvest those assets into operations that need it. Aside from this, you’ll also save money on transfers, investigations, legal proceedings, etc., as they will all be handled by the same company.

5. Minimized Write-Offs

It’s never a good day when you need to write off a bad debt, and that’s one problem a debt collecting agency can spare you. Thanks to their specialized tools and processes, backed up by experience and assertiveness, debt collectors can resolve the matter swiftly, so that you may receive your payments faster, minimize arrears percentages and avoid the dreaded write-offs.

6. Protection

Outwardly admitting to the use of debt collectors may decrease debts as old and prospective customers become aware that their debts will be turned over to collectors. With the added advantage of free legal advice upon request and fast payment processing, your debtors have little option but to pay.

7. Long-Term Benefits

When relying on an agency for your business debt collection, you can sort out your future business agreements with creditors in such a way as to increase recovery rates of future debt and all costs involved in carrying out the recovery. In other words, you can leverage their expertise today and apply it in all future business transactions, which will potentially save you a fortune in legal fees.

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