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.

Experience and Expertise

One key benefit of a debt collection agency is their skills, knowledge and expertise. A good debt recovery agency will have a proven process of effective debt collection, backed by years of experience and positive client reviews.

Their success depends on their skills, and without sufficient experience, they would never be able to recover a debt.

Professional debt collection agencies are experts in their field. Federal Management, for example, is widely regarded as the UK’s leader in commercial debt recovery. As well as this, we are also known as the leading international debt collection experts in the UK.

Sophisticated and Effective Service

Debt collection agencies are experts at recovering money for those who are owed it. This is achieved through specialist and dedicated processes.

Federal Management has always taken steps to improve and enhance our recovery process throughout our history. Our cutting-edge systems, like advanced debt recovery software, real-time tracking, and automated communication tools streamline the entire collection process, helping us deliver the best service possible.

The Highest Debt Recovery Rates

One of the most important factors for debt collection action is its effectiveness, and you should compare them to other methods of collection like legal action and solicitors.

By doing so, you will immediately see that the recovery rates are superior. Federal Management, for instance, has an average debt collection rate of 90% on all undisputed business claims.

This recovery rate demonstrates the benefits of instructing a reputable debt collection agency for your business.

Specialists in All Industries

Having a professional agency with an understanding and expertise in your industry is paramount, as it ensures that they are well-versed in the specific challenges and nuances of your market and client relationships.

The agency you instruct should be able to immediately pick up your debt instead of having to familiarise themselves with the details of your sector.

Federal Management are experts in every working sector in the UK, from retail and healthcare to finance and even overseas debt.

Since 2004, we have dealt with cases in all industries. This means our experts already understand what the best course of action is.

Ability To Collect Debt from Anywhere

Are you collecting the debt yourself or hiring a debt collection solicitor? If so, you may have issues when attempting to collect a debt from someone in another country.

Factors such as the language barrier, local business hours and a lack of understanding of another country’s debt collection laws can make recovering a debt difficult.

Federal Management is the UK’s leading international commercial debt collection agency. Our global network of international collections agents each has an intimate knowledge of their own country’s debt recovery laws and practices.

As such, we can recover commercial debt from anywhere in the world with ease.

Low Commission Rates

A key benefit of instructing a commercial debt collection agency is the cost.

Compared to expensive solicitors or the cost of collecting the debt alone, agencies operate at a much lower price point.

For instance, Federal Management has the UK’s lowest commission rates for any debt collection agency, beginning at 6%.

As well as this, our professionalism and service levels are unaffected by this low cost. This helps our clients receive the best service for a nominal fee.

Understand Your Chances of Recovering Debt

One benefit of instructing a commercial debt collection agency is that you have the best chance to recover your funds.

Federal Management provides a completely free pre-action assessment of your debt. During this service, a debt collection agent will examine the chances of a successful recovery.

If we believe we can recover the debt after assessing your case, then it is very likely that it can be.

If there is a low likelihood that recovery can be successful, we will let you know the potential outcomes.

This is crucial information for those looking to recover money. If you know whether the debt is valid and recoverable, you will save a lot of time and money.

Accredited and Regulated

Another key benefit of instructing a commercial debt collection is their accreditations and regulators.

It is important to only look to instruct an agency that has a regulating service. Those that don’t may use tactics that lead to more problems later on in the process.

Federal Management is regulated by the Financial Conduct Authority (FCA). We are also members of the UK Debt Collection Bureau and are accredited by the Credit Services Association (CSA).

This means that our clients can have peace of mind that we handle all collections in the most professional manner possible, in compliance with local legal frameworks.

Frequently Asked Questions

How much does debt collection cost?

Each individual case is unique, and the correct price must be determined by an expert. Speak to us now for more information.

What should I look for when choosing a debt collection agency?

You should look at customer reviews, accreditations, and evidence of a proven recovery process. Contact the agency in question to find out more.

How successful is debt collection?

Federal Management has an average collections rate of 90% and above on all undisputed business debts.

Can foreign debts be recovered?

Yes, Federal Management can recover debt from virtually anywhere in the world. Speak to us now for more information.

How long does it take to recover a debt?

Depending on the case in question, recovery times can vary based on its complexity. Speak to one of our advisors for more information.

What should I do when faced with the issue of an unpaid invoice?

When faced with the issue of an unpaid invoice, you must act.

Leaving the debt idle will only harm the company, and also set a precedence for similar events to happen in the future.

It is important to understand the best and most appropriate way to recover your debt, and what options are available to you.

How effective is having a credit-control process?

Most businesses have a credit-control process in place. This is an excellent measure to take, and whilst this is effective there are always a few bad payers with whom you cannot reason.

When should I consider escalating my debt recovery efforts?

If you have already spent time and money through the normal credit control process but have not achieved success, it’s time to consider another option.

It is not cost-effective to continue the recovery process in-house if the debtor refuses to pay despite mediation efforts. If this is the case, it is better to escalate the matter to a commercial debt collection agency.

It is important to set a form of ‘cut off point’ if you already have a credit control process. If a debtor ignores your methods, you should not waste any more time or money on them.

What are the drawbacks of pursuing court action for debt recovery?

Hiring the services of debt collection solicitors is also an option, but this is a very expensive and time-consuming process. Whilst court action can be effective, the cost of the solicitors can outweigh the value of the debt.

As well as this, there is no real guarantee that the action will be able to recover your money, with many cases ending with a CCJ being written.

Whilst this is a good outcome, it still means that you will need to spend even more time and money to enforce the CCJ.

The benefits of a commercial debt collection agency outweigh that of other options.

You should do proper research into finding the best debt collection agency for your own requirements.

Federal Management: UK’s Leading Business Debt Recovery Agency

Federal Management is the UK’s leading commercial debt collection agency. We have successfully recovered millions of pounds worth of unpaid debt year after year and will continue to do so.

If you are owed money by a non-paying client, it is always better to use an accredited debt collection agency like Federal Management. Our award-winning agency is fully accredited by the Financial Conduct Authority (FCA) and Credit Services Association (CSA). Our adherence to these strict regulations means we will recover your funds efficiently and in a manner that protects your business’s reputation.

We’ve also earned prestigious accreditations, including Investors in People, ISO:9001 certification, and the CAI Accreditation from the Credit Services Association.

Instructing the services of a professional commercial debt collection agency is the best way you can recover your money. If your business is owed money, speak with our friendly experts now.

Posted on February 2, 2022