Why Use a Business Debt Collection Agency?

Using a Business Debt Collection Agency

Every business in the UK will have experienced some kind of issue with a non-paying client or unpaid invoices at some point. This can cause major disruptions to the company’s cash flow. At worst, it could make it difficult for them to fulfil their own financial obligations.

Dealing with non-paying clients and overdue invoices in the most effective manner is often challenging. In the past 20 years, it has become increasingly common for companies to utilise the services of a business debt recovery agency. Many companies seek to outsource their credit control requirements to a third party because it allows them to focus on their core business operations.

An agency provides effective debt recovery services aimed at saving businesses money and time.

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 Business Debt Recovery Agency

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. Even with this, their ability to enforce the debt is limited, and it can be especially challenging to collect bulk overdue debts.

But, besides saving businesses the time and effort of trying to recover outstanding debts, there are many more benefits to using a debt recovery agency.

Save Valuable Time & Money

It can begin to cost a lot of money for businesses to recover a debt themselves. Many cases need to be outsourced to a professional commercial debt recovery agency anyway, even after a credit control team has performed their task.

Agencies offering professional debt collection services are able to effectively recover a debt in a swift and law-abiding manner.

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). 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.

Instructing an Agency for your Business Debt Collection

If you are owed money by another business, you should contact a professional business debt collection agency to help.

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.

For more information on how we can help your business, speak to our friendly debt collection agents today.

FAQs About Using a Debt Recovery Agency for your Business

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?

The issue of business debt must be taken seriously, and a failure to act when owed money can cause problems for any organisation.

It is important to act on an unpaid debt as soon as it is appropriate to do so. Companies that do not pay what they owe can only expect to be chased for payment.

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.

Many companies use a debt collection agency after their own credit control process has been performed. In recent times, it has become more common to use an agency as a standard part of their processes. 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?

Every debt is unique and must be priced according to its own unique circumstances, but 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 a Business Debt Be Recovered from Overseas Companies?

Yes, if the debt can be recovered, Federal Management’s collection agency will be able to enforce it, regardless of where it originates. 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 Business Debt Recovery Agency?

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

What is the Business Debt Recovery Process?

Each case of debt collection is unique and must be looked at individually. Our business debt collection agency has a tried and tested debt collection process that almost always guarantees results. 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?

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. Using an accredited debt collection agency like Federal Management is the most cost-effective and hassle-free way to recover debts.

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