Third-party agencies that are tasked for collection and other outsourcing services have recovered an approximate 45-billion dollars last 2010, and if you could imagine with the innovation in technology which makes them easier to track down stubborn debtors easier, this figures could be tripled today.
In a lot of cases, businesses would have written off that money if it were not for the efforts put up by their debt collection agency.
By hiring a debt collection agency, it has some very obvious advantages; however, you should also be very aware of its advantages too, so let us check out some of its most noteworthy pros and cons in this post.
The pros of hiring a debt collection agency
- They can collect when you are unable to– The delinquent debtors may not easily respond to your collection efforts, however, you put a professional for the job and the bills often get paid very well according to business experts. There is about eighty-percent of debt that has been collected within the first month that is done so by the original creditor, however, once the debt turns delinquent, a professional is needed to do the job.
- They free up your resources and your time– Debt collection for business owners can be time-consuming and very costly especially for small and local businesses that would prefer to focus on their business rather than chasing their stubborn debtors.
- They are equipped to do the job-Debt collection agencies have the right set of tools to track down and collect the debts from these customers. They will use the latest technology in communicating and tracking down the whereabouts of these debtors.
The cons of hiring a debt collection agency
- They charge you an expensive service fee– You have to pay to have your delinquent accounts to be collected professionally. However, the majority of collection agencies can charge you a contingency fee or a percentage of the entire collection. However, he stresses that the fee should not be your only consideration, but the return of investment because of the collected debts.
- Debt collectors can affect your customer relations– It could be true knowing that a lot of debt collectors lack the communication skills which makes it ill between you and your customer. Just because your client is in a difficult financial situation today, does not mean that they will not come back to pay their debts in the future. This happens all the time especially that there are some debt collectors that are rude in nature.
- Debt collectors can get your business into trouble– The collections for business accounts are not totally governed by government agencies and laws in dictating how these debt collectors collect from the customers, because of this, it can possibly go beyond the law at some instances.