Why Use a Business Debt Collection Agency?

Using a Business Debt Collection Agency

Many businesses in the UK struggle with non-paying clients or unpaid invoices. This can cause major disruptions to the company’s cash flow. At worst, it could make it difficult for them to fulfil their financial obligations.

In the past 20 years, it has become increasingly common for companies to utilise the services of a business debt recovery agency. By hiring a professional debt recovery agency, businesses can concentrate on their core operations, confident that their debt collection is in the hands of experienced experts.

This article examines the additional benefits of using a business debt collection agency, and how they help companies recover owed money.

Benefits of Using a Debt Recovery Agency for Your Business

Commercial debt can affect businesses of all sizes, and many do not possess the resources and expertise required to collect a debt themselves.

Larger organisations often have a credit control department that can chase clients for payments. These teams chase payment through phone calls and emails, with some also sending letters. Despite these efforts, their ability to enforce the debt is limited, and it can be especially challenging to collect bulk overdue debts.

Besides saving businesses the time and effort of trying to recover outstanding debts, there are many more benefits to using a debt recovery agency. Below are some of these key benefits:

Save Valuable Time & Money

It can cost a lot of money for businesses to recover debt themselves. While some companies believe outsourcing debt recovery is a more costly option, they often overlook the hidden expenses associated with in-house collection efforts.

Agencies offering professional debt collection services are able to effectively recover a debt in a swift and law-abiding manner. Their expertise in the legal frameworks surrounding debt recovery ensures that all actions taken comply with regulations, minimising the risk of potential disputes or costly complications.

Legal Compliance

Businesses may not know the legal frameworks that govern debt collection efforts, potentially jeopardising their chances of successfully recovering unpaid debts. Debt recovery agencies stay up to date on the latest local laws, ensuring money is recovered legally.

Federal Management, for example, is the only UK debt collection agency regulated by the Financial Conduct Authority (FCA) and Credit Services Association (CSA). This means that we conduct all cases in a way that complies with the UK’s debt collection laws. This, in turn, helps to ensure that we provide the best peace of mind to our clients.

FAQs About Using a Debt Recovery Agency

Our debt recovery professionals are always happy to answer any questions you may have about B2B debt collection. Take a look at our answers to some of the most frequently asked questions below.

When Should You Use a Debt Collector?

It is important to act on an unpaid debt as soon as it is appropriate to do so. Most companies have payment terms of 30 or 60 days. If the payment has not been made after this time has passed, it is appropriate to contact a third party.

The issue of business debt must be taken seriously, and a failure to act when owed money can cause problems for any organisation. In cases like this, an agency will be contacted within 30 days of an invoice being overdue.

Can Businesses Charge Debtors Interest on Late Payments?

Yes, they can. When considering business debt collection rights, some organisations choose to add late payment interest charges to their invoices. This is an excellent way for the original creditor to provide an incentive for clients to pay on time.

How Much Does a Debt Collection Agency Charge Businesses?

Federal Management stands out with our low commission fees. We operate on a fixed fee, low-cost commission rate starting from as little as 6% depending on the value, volume and complexity of the debts.

Can Business Debt Be Recovered from Overseas Companies?

Yes, if the overseas debt is legally recoverable, Federal Management’s collection agency will be able to enforce it. We have a trusted network of international partners that enables us to recover debt from virtually anywhere in the world.

Can Small Businesses Use a Debt Recovery Agency?

Any business, regardless of its size, can use the services of a debt collection agency. We understand that smaller businesses may not have the funds to hire a dedicated in-house collections team. Fortunately, Federal Management helps companies of every size recover bad debts every day, aiming to make our services accessible to all.

What is the Process for Business Debt Recovery?

We will send formal demand letters, SMS, emails and phone calls to the debtor requesting payment. If these attempts fail, our experts in dispute resolution will meet the debtor with empathy and try to arrange a realistic payment plan that suits all parties.

As a last resort, the creditor may need to consider legal action. However, less than 1% of our debt recovery cases require costly court proceedings.

Should I Take Legal Action Against A Debtor?

While legal action is an option, using an accredited debt collection agency is the most cost-effective and hassle-free way to recover debts. Many businesses choose to take their debtors to court, and in some cases, this can help to recover the debt. However, it can be a very expensive option, as many solicitors and legal firms charge a great deal more for their services.

This cost can lead to many businesses writing off the debt as the cost of the collection becomes too great.

 

Federal Management: UK’s Leading Agency for Business Debt Recovery

Federal Management has helped hundreds of businesses recover millions of pounds worth of unpaid debt since our opening in 2004. With 20 years of experience, ISO:9001 certification, and Financial Conduct Authority (FCA) and Credit Services Association (CSA) accreditation, you can rest assured you’re in capable hands.

If you are owed money by another business, you should contact a professional business debt collection agency to help. For more information on how we can help your business, speak to our friendly debt recovery agents today.

Stop wasting time on unpaid invoices! Let our experienced debt collection team recover what’s owed to you. Call us today for a free consultation.

Posted on September 22, 2021