When to turn to debt collectors for help

There are two occasions in which you could and should employ the services of a debt recovery agency: when your resources are stretched, and when your customers aren’t paying your invoices.

Debt collectors aren’t just there to chase the long-standing debtors down. They have the expertise to help you keep on top of your ledger on a continuous basis leaving you the time to focus on building new business and maintaining client relationships.

Collection agencies can be employed much earlier in the cycle than many realise to handle the ongoing management of late payers. This has the added effect of showing your customers how serious you are about your payment terms and, in a climate where many small companies are going out of business because of late payers, this is no bad thing. In fact, Experian, the leading global information company who specialise in credit management, found that companies using debt collection agencies to manage a proportion of their collections reported significantly improved recovery rates and efficiency.

Of course, debt collection agencies are most frequently brought into to handle the old and difficult debts –typically the gone aways and the debtors with cash flow problems. In these situations, success rates are all about the timing. In other words, don’t leave it too long before you employ the services of a collector. Look out for the tell tale signs of a bad debtor and respond fast because if your customer does have cash flow problems, you need to make sure you’re first in line for getting paid.

It’s no surprise that debtors tend to pay those suppliers who have brought in the debt collection agencies first. Bringing in an agency shouts a very clear message: you are serious about taking further action to make sure your invoice gets paid. Your debtor won’t want to go to court if it can be prevented. Often, agency contact is all the push they need.

There are many other benefits to outsourcing the task to a third party. Chasing an old debt is time consuming. Late payers rarely answer their calls and when they do, they will probably ask you to call back another time or use a delaying tactic to put you off calling for another week.

Debt collection is an admin-heavy task and a difficult job, often requiring out of hours contact, which can be an expensive to do in-house if you have to pay staff overtime. Tracing missing people or companies requires expertise, persistence and access to data – all of which a good debt collection agent should possess.

Debt recovery agencies aren’t just about knocking on doors and threatening legal action. They can provide a valuable resource to your business at any stage of your collection process. Read more here about how debt recovery agencies can help your business.