If you are a small business owner, you know how important customers are to your success. By making timely payments on the goods and services you provide, customers help give your company the resources vital to growth. Unfortunately, there will probably come a time when a customer fails to pay off a debt, and you will be forced to seek payment by any means necessary. One such way to receive overdue payments is through using a debt collection agency.
A debt collection agency is basically any company hired by a business to collect money that is owed. These companies should be employed as a last resort, but they can be very helpful if needed. One major benefit to employing a debt recovery agency is time; more specifically the recovery of time crucial to operating your business. If you are busy writing letters and making phone calls to a customer who owes you money, you are certainly losing productivity. Debt collection agencies have the people available to handle all aspects of getting your money, so you can return your focus where it belongs – on your business.
Debt collection agencies also send a message to the customer that you are serious about recovering the funds. When faced with the prospect of a constant barrage of phone calls at home and work, most people elect to pay off the debt. In addition, the threat of having their credit score negatively affected usually yields payment. But despite these negative consequences, there are still people who refuse to pay. How can a debt collection help in this case?
Depending on the size of the outstanding debt, and if there is still no sign that a customer intends to pay, you do have the option of going to court. A debt collection agency will be able to handle the legal aspects of the proceedings, which can be a huge advantage. However, it is important to consider all sides of the case before deciding to proceed. Court will likely be a costly proposition, and unless the debt is large enough to warrant legal action, it may be best just to bite the bullet and take the loss.
One final benefit of employing a debt collection agency is the fact that these companies only get paid if they can recover the debt. This makes a debt collection agency a low-risk option in your attempt to recover back payments. If they are unable to get the customer to pay, you have at least saved the time that would otherwise have been lost. And if they are able to secure the payment, you will only have to pay them between 4% and 10% of the debt. This creates a win/win situation for both you and your business.
For a small business owner, the benefits of employing a debt collection agency are undeniable. In a perfect world, your business will avoid ever needing to use such a company. But it’s nice to know that a debt collection agency is standing ready, just in case.