Are all Debt Collection Agencies the same?
p>Not matter what industry you are in, there are always people and companies who do not like paying what they owe.
Working with a Professional Debt Collection Agency(DCA) can produce fantastic results. The question here is: Are all Debt Collection Agencies the same? – The simple answer is the same as any other industry, NO!
The true value of choosing the right Debt Collection Agency for you or your Business can be massive. Both in terms of cost and results. One thing that everybody has in common is that they all want the best results, but want that those results delivered for as little cost as possible which is quite natural. What is more important to you? Results? If it that is not your focus, it really should be.
So back to the case in point. All Debt Collection Agencies are not the same. We are going to list the areas that should be of massive consideration before selecting a potential Agency to work with.
Professionalism – When instructing a Debt Recovery Agency, they are effectively an extension of your Business. You would not employ just ‘anybody’ to work in your business so apply the same logic to this scenario. Are they ethical and do their values meet yours?
A Professional Debt Collection Agency will usually be licensed by the Financial Conduct Authority, Members of the Credit Services Association and hold some form of professional accreditation. The ISO:9001 accreditation or the Investors of People Award are typical positive indicators to look for.
You may also want to search for feedback on the company around the internet. There are many review platforms that can provide indicators as to their general performance and reputation.
Actions – What Debt Recovery action will they take? Actions speak louder than words and a single letter or email being sent to your debtor simply will not get the job done. Also, if your debtor is abroad, what resources do they have to facilitate this.
Results – Obviously this is the key objective of the whole exercise. Results are everything but great results are only achieved using a great service. What actions will be taken to recover your money? There are purported ‘Debt Collection Agencies’ who will simply send an email or a letter – What kind of results do you think that will achieve? It is a simple fact that a far more in-depth, diligent and pro active approach will produce far superior results. so this should be a major consideration.
Cost – Be very clear about what it is going to cost you. The commission rate should be clear from outset. Some companies will make you liable for costs – Will you be liable for disbursements, abortive fees, trace fees, repayment management fees etc or is the service inclusive of Debt Recovery actions? The ethics of the company you choose to use will very much be instrumental in this. There are many tales of people receiving small change out of large amounts recovered simply because they failed to ask the right questions in relation to cost liability.
Communication – You need to understand how progress with the accounts is going to be reported to you. Too often we hear that companies have used a DCA and have no idea what is actually happening with their accounts and, indeed what monies have been recovered.
Will they provide you with regular progress reports, is there an accurate online account management system you can access? Be clear about what information is going to be supplied to you or you will just end up very frustrated.
Areas of specialism– This needs to be a major consideration in terms of results. If a DCA has no knowledge of your industry, this will reflect in the results they obtain for obvious reasons.
Some may only specialise in Commercial Debt Recovery whereas others just private Debts. There are further sub categories that can confuse even further but it is safe to say that not all have the same experience needed to make you you recover as much as possible.
The old adage is that “choosing the wrong service is worse than choosing none at all” for very obvious reasons. It is not just the value of a debt you could lose. You could be landed with ‘hidden’ fees or costs, a damaged reputation and all manner of associated problems.
You may as well effectively throw your invoices in the bin if you do not make a smart decision. – Think smart. It really will pay to apply logic, thought and consideration before choosing a DCA.