Top 10 reasons to use debt collection agencies

(Especially if you chose the right one!)

Why should you want to use a debt collection agency? What are the top 10 reasons for passing your credit control to a specialist?

1.      There are a special few (such as CPA) who make a living by resolving payment on outstanding invoices.  We enjoy it because we like testing our professionalism but 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 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.  Final Reason! Your money is more important to you than anyone else.  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.

David Baber, Managing Director


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