Benefits of Using a Commercial Debt Collection Agency

Why Choose a Commercial Debt Collection Agency

Every business understands the issues that non-paying clients can present. Cash flow is put at risk, as is the rest of the business and its financial obligations.

During the Covid-19 pandemic, there was a rise of 6% in corporate debt, a figure of £79 billion in total. This statistic highlights that collecting debts is a business necessity. Because of this, making sure your debt collection process is as effective as possible is crucial.

Many businesses opt to recover payments themselves. This is often a time-consuming process, and in many cases, unsuccessful. Credit control teams and accounting staff have a limited number of enforcement options. Whilst good preventative measures can be implemented, debtors can go to any length to avoid paying what they owe.

It is critical that the debtor is made to pay the debt, and doing this in the right manner provides your business with a great number of benefits.

In most cases, UK companies will eventually choose to outsource the collection of their debt to a professional. This could either be through court action or by using a professional debt collection agency.

Before committing to a certain course of action, it is a good idea to consider every option available.

Benefits of Using a Commercial Debt Collection Agency

The use of a debt collection agency is widely considered to be the best choice for when owed money. We asked our team of experts to help outline some of the key benefits when businesses use a debt collection agency.

Low, Fixed Cost

A concern for many companies that want to use a debt collection agency is the potential cost. Whilst the perception is that it is an expensive solution, the reality is very different.

Most agencies provide a low-cost service, which enables as many people to benefit from it as possible. Many debt collectors will offer no-win, no-fee deals, but this is often a front for hidden costs later on. With this in mind, you should always research the agency you are considering before committing to use them.

Federal Management’s commission rates begin from as low as 8%, making us one of the most cost-effective choices available. Plus, we do not charge abortive or hidden fees, as we believe in complete transparency with our clients.

For more information, speak with one of our advisors today.

You Can Concentrate on Helping Your Clients

It is common for businesses to attempt debt recovery themselves. This process involves credit control teams and accountants chasing payment themselves. Phone calls, emails and letters are sent in an attempt to recover the debt.

Unfortunately, this is often ineffective, and these teams are left with few options when a debtor ignores them.

Additionally, the rules and guidance for debt recovery are often unknown to these internal teams. This results in ineffective collection efforts, potential legal issues, and a higher risk of damaging client relationships. Once a debt has been passed over to a professional, the agency working on your behalf will handle everything. Federal Management provides a complete service and allows the original creditor (your business) to concentrate on their clients.

Reminds Clients to Treat You Fairly

Every business owner and accountant knows of the tricks and tactics late and non-payers can use. Regardless of the type of debt, attempts will always be made to “beat the system”.

Instructing a reputable debt recovery agency lets your clients know that you are serious about getting paid.

A professional debt collector like Federal Management will handle all cases properly and fairly. The perception of debt collectors has it so that they are a “last resort” solution, but the reality is very different. Agencies provide a professional service, which can be firm or sensitive as the situation requires.

As well as this, Federal Management is approved and authorised by the Financial Conduct Authority (FCA). Prudent business people know that this is the best solution, as future business opportunities can be beneficial.