06 Aug Debt Collection Service – Complete Guide to Hiring
It is common practice among businesses to extend credit to customers to earn goodwill and improve sales. If customers do not pay their debts on time or try to get out of paying, debts can turn into a heavy expense. Bad debts, if not deal with immediately, can accumulate and become a black mark on a company's balance sheet. This can seriously harm a company's credit worthiness.
Companies deal with bad debts by authorizing in-house personnel to collect debt or outsource the job to a commercial collection agency. Collecting bad debt is a time-consuming process that requires timely follow-up and accurate record keeping. A commercial collection agency is a better option than an in-house system as it is more professional, costs less and shows better results.
Commercial collection services have skilled professionals in their employ. These professionals are trained in the art of debt collection. Depending on the type of debtor, the collection agency will come up with a strategy for collecting debt. The approach followed is respectful and considerate of the financial obligations of the customers. This advances the customer relationship with the credit company.
Advantages of hiring a collection service
There are many advantages to hiring a collection agency. With a commercial agency working for your business, you can:
- Focus on your business plans without the worry of bad debt accumulation
- Have good customer relationships as collection agencies are professional and respectful
- Save the expense of in-house salaried personnel
- Recover more debt as collection agencies have the incentive of getting a percentage of what they collect
- Secure your business from legal hassles as the collection agencies are familiar with debt collection rules and regulations
Points to consider before hiring a commercial agency
Many collection agencies violate regulations and strong-arm customers into paying their dues to get a bigger cut. This is not just a violation of the law, but also ruinous to your business reputation. Ensure that the individuals who represent your company to the customers are well-trained and professional in their dealings with them. A good rapport between debtors and creditors goes a long way in shortening the debt collection process, and ensuring more collection.
All collection activities must be transported out in accordance with the local region's rules and regulations. Violating rules to get more collection is not worth the cost of losing customers and possibly facing litigation.
A high success rate does not vouch for the quality of the agency's services. Check out the following points before hiring a collection service.
- How long has the collection agency been running?
- Does the agency have experience with customer accounts similar to yours?
- Has the collection service worked with businesses of your size?
- Is the agency capable of handling the amount of debt involved in your case?
- What are the agency's strategies for collecting debt?
- Are the collection agency personnel well-versed in debt collection laws?
- Can it give references of clients, which you can verify?
- What are the collection services's charges? Survey the market to get a competitive rate.
Collection agencies help your business in reducing bad debts and improving customer relationships. Be prudent in selecting a collection agency for your business. The right collection agency is a valuable business partner.
By Daljeet Sidhu