Debt collection agency

The perception

A debt collection agency is often seen as the last resort. Debt collectors can be viewed as unpalatable as estate agents or bankers by some. If I mention socially that I work for a debt collection agency, or that I am a debt collector then it either kills the conversation or people immediately joke about me knocking on peoples doors, threatening to breaking peoples arms or legs in the pursuit of unpaid bills. But look at me. I am five foot eight, wear glasses and weigh just over 12 stone. I am not intimidating anyone.

The Reality

Modern day debt collection is far removed from the stereotype.  The industry’s trade association, the Credit Services Association has done tremendous work to move the industry into the main stream. Introducing a code of conduct that sets out proper practices that treat customers fairly and responsibly while looking out also for the interest of their clients. Yes there are some rogues out there as there are in any industry but by relying on an accredited member of the CSA such as The Credit Protection Association, you can be assured you are using a debt collection agency that will act in accord with the CSA code of conduct.

Why CPA are different

The Credit Protection Association, formed in 1914 has always been at the forefront of providing an ethical and efficient collection service. Most debt collectors charge a percentage of the money recovered as a fee. They contact your customers directly, tell them they have taken over and ask them to pay the debt to them.  They will then deduct their percentage and pass the balance on to their client. Some unscrupulous agents have sadly been known to forget that last stage and run off with the proceeds. Either way, the fact that the customer has to make payment direct to a debt collector can cause damage to their all-important trading relationship with their supplier.

The Credit Protection Association differs from other debt collection agencies. Firstly we always direct the customer to pay directly to our clients. We don’t want to handle the cash. Our Overdue Account Recovery service is a polite reminder service of a series of escalating letters chasing payment on behalf of our members. As we direct the customers to pay their creditor directly, it allows their relationship to be maintained and remain amicable. The customer can maintain they were always in the process of paying. Of course it wasn’t because a debt collector got involved. We at the Credit Protection Association are only too happy to allow your customers that illusion.

Secondly we don’t charge a percentage on recoveries for  our Overdue Account Recovery Service. Most debt collectors charge anything from 10% to 25% for collections. For Credit Protection Association members, the Overdue Account Recovery service is all included in their fixed annual subscription. As our service facilitates the recovery of hundreds of millions, this is an extremely efficient and cost effective recovery service for our members who utilise it to the full. In the small percentage of cases where the Overdue Account Recovery service does not resolve the outstanding account, we do offer more intense debt recovery services which may incorporate legal action. In such cases we do charge a fee based on a recovery but in most cases, this can be added to the amount due from the debtor and therefore it doesn’t affect our client.

Thirdly, decades ago we realised that our members needed more than just debt collection. They wanted a full credit management service that not only included debt collection but also included information and credit reports that enable our members to assess the credit worthiness of their clients and thus set their credit limits accordingly. The Credit Protection Association is not just a debt collection agency, it is a Credit Management service with debt collection, credit reports and a full range of other complimentary services all offered to our members under the one roof of their subscription.

What it means for you

Deciding to use a debt collection agency shouldn’t be your last resort. Getting a reputable partner onside should be one of the first things you do when getting into business.  You need a partner who can help you establish good relationships with your clients from the very beginning. When you ask new clients to complete a CPA credit application form; when they see our logo on your invoices then before the invoice is even due; they will know that your 30 day credit terms mean 30 days, not 45, not 60 days. They will know to prioritise your payment and should they forget, then our first polite letter will quickly remind them and accelerate their payment.

Here are the top 10 reasons for passing your credit control to a specialist debt collection agency.

1.      Debt collection agencies such as CPA make a living by resolving payment on outstanding invoices.  We enjoy it because we like testing our professionalism. For many people it is the last thing they want to do! Even when you are the business owner and it is your own money at stake, it is attractive to find almost anything else to do, rather than chase outstanding payments. So why not let a debt collector do the necessary work for you? Surely, debt collectors are experts in their field – business owners are experts in theirs.

2.     Using a third party debt collection agency to resolve overdue accounts does have an impact. There is a reason!  Wonga set up fake collection agencies to collect their debts because they knew the psychological power of ‘third party’ name involvement. Your customers might ignore your statements but even when they get a very courteous approach from The Credit Protection Association, they are immediately motivated to pay in most cases.

3.     Using a third party for resolving over due collections actually boosts branding and reputation.  A sensitive collection agency will flush out any gripes or reasons for non-payment; issues can be addressed and they can be resolved to everyone’s advantage.  It is crucial to remember that when an overdue account starts becoming a worry, the debtor resists buying again because of potential ‘Loss of face’ if he is asked to pay before the new order can be processed.  So he buys from someone else maybe.  The Credit Protection Association says “Have Paid, Will Trade!” and  new business is free to come in.

4.     Allowing a third party to field customer’s issues can mean that your staff will maintain a good relationship with clients and it will often boost customer retention. The Credit Protection take the exceptional step of directing all payments to you, not CPA. This allows the ex-debtor to save face by believing he would have paid anyway!  Thus customer goodwill is retained.

5.     Letting customers know a collection agent is retained will strengthen your position and reminds customers that you expect to be treated fairly.  In turn you will treat them fairly and may be able to extend their credit facilities when you have confidence they will pay you in accordance with terms.  This can vastly boost trade and make it difficult for any competitor to catch up.

6.    If you want to concentrate on making your customers happy, achieving new sales and keeping your business running smoothly, all this can be done if you select trusted third party experts.

7.    Overdue Account Recovery and hard core debt collection requires particular skills and expertise with supportive sophisticated I.T. systems. You need to be persistent but fair; understand human psychology, be tactful, a sound negotiator and have the ability to track down peripatetic debtors. Why not indeed use a trusted third party who has all these skills?

8.    Setting up your own internal collection system can be expensive. You need to hire and train specialist people, have licences where applicable and manage an operation that is not your forte. It will take time to set up and there is no guarantee it will be efficient or even cost-effective. The collection agency is already in place its expertise and connections – so there must be no delay in giving instructions and having them executed.

9.   Debt Collectors have wide experience in the marketplace. Bad payers tend to be serial bad payers!  The debt collection agency may have well dealt with your debtor before on behalf of another client. It will thus have useful background knowledge from those interactions.

10.  Your money is more important to you than anyone else, isn’t it?  Debtors frequently “go bad” if they are neglected by their creditors.  Time is of the essence after an account goes ‘past due’, so to appoint the right agency sooner rather than later is crucial.

We hope that you have found this information on debt collection agencies to be helpful. If you have any questions, or are interested in using our services, by all means contact us.

By James Salmon 27/4/2017 (edited 20/9/17)

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