An Introduction to Debt Collection
Debt Collection Strategies
It is not easy to get struggling businesses to pay you, albeit you are rightfully owed this money. Do you think you are the only account wanting to get paid? Hardly, they most likely have dozens of businesses trying to get money out of them. They realize they cannot pay all of them, or else they would go out of business. How do you get your account to rise to the top of the stack and get paid?
Most businesses have starting using specialized collection agencies, and not the run of the mill agency at that. There are so many specific industries, that a generic collection agency will not be able to communicate with the debtor on a professional level and will most likely not be able to collect. However, if you are able to find an industry specific collection agency, then you will have much better success and will not have to explain your industry to the collection agency.
You Get What You Pay For
By all means, this statement is true in the collection world. There are many agencies that look like they just opened up shop in their basement, and many do. It is not a hard industry to enter, but it is a hard one to survive and succeed in. The barriers to entry are a telephone and bank account, which most people have. The real key is to find a company that has legal experience and can leverage the laws in your favor. Most generic agencies do not have this and will resort to hostile and aggressive threats, which are against the law. And if you are like most businesses, you fear that turning over your account for collections will scare your customer away. That is the last thing that you want to do, but you do want to get paid. It is a tight rope walk to get paid and keep your customer, but there are agencies out there that can do this.
What is it worth?
A good collection agency will cost you some money, but not as much if you hire a discount firm. The reason being, a discount firm will collect a lower percentage of your accounts and will end up scaring your customers off. A good standard to use when hiring a collection agency is 30%. This is a good rate, and a lot better than losing all of the money when you are unable to secure the funds yourself.
Do not waste your time with debt collection. It is better if your business focuses on what it is good at. The opportunity cost of trying to collect the debt is marginal, and will only create headaches for you.
Good luck with your debt collection, and know that you are not alone. All businesses have debts to collect. Make sure you get yours collected!