Worldwide Debt Collection Agency collect debt
One of the key findings from the latest Global Collections Review shows that external debt collections agencies are used to collect international debts by more than half (53%) of companies using outsourced debt collection services to help improve cash flow and increase liquidity.
Of all the companies surveyed, more than half of those in the Netherlands and Sweden are using external debt collections agencies, which is well in excess of the European average of around one-third. Interestingly, these two countries also returned figures of less than half of the European average on domestic receivables more than 90 days overdue, with similar results for international debts.
The effectiveness of external debt collections agencies and their abilities to deliver results topped the list of why European businesses choose to take on such an external agency. When asked to rank a series of eight criteria, ‘success rate’ was regarded as most important with ‘price’ rated as only of secondary importance, followed by ‘reputation’, ‘the ability to maintain a positive relationship’ and ‘local knowledge’. In addition to these general trends, some interesting preferences can be spotted in some countries. Businesses in Italy, ranked ‘reputation’ as more important than ‘success rate’, while businesses in Germany rated an agency’s ‘ability to maintain a positive relationship with the debtor’ the highest of any country surveyed.
Raymond van der Loos, Managing Director of Atradius Collections explained: “For many businesses the recession and the need for liquidity were key factors in deciding to use an external debt collections agency, which was reflected in the findings from our original study six months ago. Our new Review provides some clear evidence that this development is continuing and as a result of the successes that have been delivered by external debt collections agencies, it is now the dominant method in some countries.”
He added: “This new study also identifies some interesting attitudinal, cultural and geographic differences, which help us ensure we deliver a high quality local service in a global market. Also, the question of maintaining positive relationships with debtors, raised by businesses in Germany in particular, has never been an issue for us as in our own regular customer satisfaction surveys, more than 90% of customers say that we maintain positive relationships.”
Among the five reasons for not outsourcing debt collections, ‘lack of trust in the success of the outsourcing party’ came low on the list at fourth with ‘cost’ ranked only one place higher. This indicates that the debt collections industry is well regarded even by businesses that don’t use outsourced debt collections and that ‘cost’ is a relatively minor factor, whether or not a company chooses to use an external debt collections agency.
The “Global Collections Review” survey was conducted among 1758 businesses across 9 countries: Belgium, Denmark, France, Germany, Great Britain, Italy, the Netherlands, Spain and Sweden