If you have trouble collecting payments from your customers, then a debt collection agency can help. They can collect monies owed to your business. You won't have to write off debts or spend a lot of time chasing payments.
Before you choose a partner, do some research into how companies work. This research will help you choose the right agency for your needs.
1. Sector Experience
Debt collection companies don't all work with the same types of debts. They might choose to focus on business or consumer markets. Some work in both areas.
You should partner with an agency that matches your debt demographics. For example, if you are a B2C company, then you need an agency with experience in collecting debts from consumers. If you only sell to other businesses, then your agency should have a B2B focus.
You can also work with agencies who have a track record of working in your business sector. For example, if you work in finance, then it might help to work with an agency that has other finance clients.
2. Success Rates
Debt collection agencies should tell you their success rates. These rates tell you the percentage of debt cases they close and the average time it takes them to collect debts.
Ideally, you want a high percentage success rate and a low collection time average. This increases the amount of money you recover and reduces the time it takes to get it.
You need to know that a debt collection agency adheres to its sector rules and regulations. They need to treat each case legally, ethically, and fairly.
If they don't, then your business reputation could suffer. The fact that a customer has defaulted on a payment now doesn't mean that you can't work with them in the future. If your debt collection agency doesn't act professionally or is too heavy-handed, then you could lose future business.
Debt collection agencies often charge contingency fees. You pay them a percentage of the money they recover from debt. If they don't get money back, you don't pay them.
Some agencies charge flat fees; however, this is less common. It also isn't the most cost-effective payment model. You might have to pay a fee for every debt you give the agency whether they collect the money or not.
It's important to find a happy medium here between low and high costs. Ideal costs often go hand in hand with success rates. For example, you might be prepared to pay a little extra to work with an agency that has a higher success rate.
To get started, talk to debt collection agencies to find out what they can do for your business. For more information, contact a company like YCCS - A National Collection System.
A few years ago, I found myself in a tough spot. I was completely out of money, and my expenses kept piling up. I knew that if I didn't turn things around, I would be declaring bankruptcy for my business. To ward off financial disaster, I decided to invest a little time into learning how to budget. I made a few simple changes, including eating out less, paying attention to fines and fees, and avoiding excessive shopping trips. You wouldn't believe how quickly things changed. This blog is designed to teach beginners how to shape their financial future, so that you don't have to worry.