As the Government hits the headlines for not understanding how to use debt collection agencies effectively in managing its £5.5 billion of debt, businesses would do well to take note.
HM Revenue and Customs has been criticized for writing off £3.5 billion of debts due to them being ‘uncollectable’. As a result, the Government is being advised to “act like intelligent customers of debt collection agencies”. This is sound advice that doesn’t just apply to Government departments. With a third of small businesses in the UK forced to write off debts each year, it’s clear that the commercial world would do well to know how to work well with debt recovery experts too.
Debt collection agencies often receive a bad rap in the press (a few rightly deserve it) but it’s not always justified. By understanding how to get the best out of a debt collection agency, businesses can reap real benefits in terms of cost, time and debt recovery success.
Firstly, not all agencies operate the same way. Experienced, professional debt recovery agencies don’t harass vulnerable debtors who have genuine, unavoidable reasons for withholding payment. Instead, they gather information, build the case and intelligently track down and close in on late payers who are simply that – late or bad payers.
And that’s where you come in as the creditor. The data you collect and pass on to the agencies is critical. If you haven’t kept up with changes in addresses, Directors, telephone numbers, business names, and conversations, you’ll end up making debt collection a lot more difficult and drawn out than it has to be.
The more information you can pull together on a debtor the better. Be intelligent about it. Go back through your records and build a timeline of communications if you can. Look at past payment histories, differences in purchases, changes of staff, new bank details and office locations – anything that helps to paint a picture of the debtor and their true financial status. By providing your debt collection agency with this insightful data, they’ll be able to trace missing debtors professionally and quickly – and they’ll be in a much stronger position to influence payment without resorting to further court action.
If you don’t have the systems in place already, read our article on How To Gather Debtor Information.
Alternatively, give the friendly team at P&J Commercial and Consumer Debt Services a call for professional advice in debt collection.