If you own a business, then you are pretty much guaranteed to have a certain amount of “receivable income,” meaning income that is owed to you by debtors but that you haven’t yet received. When these accounts go on for too long without being paid, they are often referred to as “bad debts,” and the longer they go unpaid, the harder they are to collect on.
Obviously, you want the money to which you are owed, and you have several ways in which you can attempt to collect on it. To begin with, you can handle the debt collections process on your own if your business is small enough. If not, you can assemble a team of debt collectors to work for you in-house or you can outsource your debts to a debt collection firm, also known as a debt collection agency. If you choose this second option, make sure you choose a debt collection agency that is in compliance with the Fair Trade Debt Collection Practices Act and its regulations and requirements. If you don’t, you could find yourself in legal trouble and with a business that has a ruined reputation.
If you do choose to work with a debt collection agency, as long as you choose a scrupulous, legitimate one, you should experience many excellent benefits, which we’ll detail below.
Benefit #1: Have an Easier Time Collecting on “Aging Receivables”
As mentioned above, the older a delinquent account gets, the smaller the chances that you’ll actually be able to receive the money to which you’re owed….at least, that’s true if you’re trying to collect on them on your own. Third party collection agencies usually have special training in collecting on older debts and have a much higher success rate for collecting on these debts than businesses do on their own.
Benefit #2: Your Debts Will Be a Priority!
When you’re trying to handle debt collections on your own, you have to balance your efforts with all of the other work you have to do. When you hire a debt collection agency, however, collecting on debts is its main and only focus, so more effort will be devoted to going after your debts. Furthermore, many collections agents work on commission. That means that if they don’t collect on debts, they don’t get paid, so a lot of them will work tirelessly to collect on your debts!
Benefit #3: Easier Retention of Clients
When your company’s name is on every late notice and warning letter you send delinquent customers, they aren’t going to remember your business fondly. However, when you outsource debt collections, someone else gets to be the “bad guy.” Plus, as long as you hire the right agency, no one is really going to be “bad.” Your delinquent clients will still be treated with respect and kindness, and your business will still be able to retain customers (and its good reputation!) #DebtCollectionProcess #DebtCollectionRecoveryServices