When should my business consider using a debt collection agency?

03/04/2018

When chasing overdue payments from difficult customers, there are a number of circumstances where using a debt collection agency will be the most suitable option for your business.

But how do you know when to call in the experts?

Here we look at some of the occasions this represents the right approach.

Insufficient internal resources

Particularly for smaller businesses with few employees, it can be hard to find the resource required to chase overdue payments without neglecting the rest of the ledger. And often the person tasked with the job doesn’t have the necessary skills required to get a successful result. If this is true for your business, it can often be beneficial to instruct a debt collection agency to recover payment. Their knowledge and experience will rival in-house capabilities whilst freeing up your team to concentrate on ensuring other invoices don’t follow suit.

In-house collections efforts have failed

If you have applied all of your in-house efforts to recover an overdue invoice and the debt remains unpaid it could be time to request some assistance. With extensive experience in dealing with difficult customers a debt collection agency will have additional knowledge to get a good result when your business can’t. Plus, sometimes just the introduction of a third party can be enough to encourage a customer to pay.

The debt is significantly overdue

Statistically, the longer an invoice goes unpaid the harder it becomes to collect. So, rather than wasting valuable resource chasing the customer internally it could be beneficial to pass it over to the experts sooner rather than later.

The customer is uncontactable

If your customer is avoiding all methods of contact or appears to have disappeared completely it can sometimes feel as though collecting payment is impossible. But debt collection agencies have extensive resources available to help them trace even the most evasive customers. Then, once they have found the customer, they will know exactly which approach to take to ensure your customer makes the payment.

The customer is disputing the invoice

If your customer denies responsibility for the debt or is making a complaint in an attempt to avoid making payment, external help can be beneficial here too. A debt collection agency will work as a mediator to understand the reasons why your customer is delaying payment, and consider your terms and conditions of sale to assess the viability of their claim. Through this understanding they can work with you and your customer to deliver a solution that works for all parties and resolve any disputes to unlock payment.

A particularly difficult customer

It is common for customers to keep promising payment but never delivering, and to use every trick and excuse in the book to avoid paying altogether. If you find yourself spending too much time on a single customer, often to the detriment of others, consider sending the account to a debt collection agency. They will have the knowledge, tools and experience required to get a successful result. And you will free up time to concentrate on your other invoices.

Repeated excuses

If your credit control attempts are met with repeated excuses it could be that your customer is simply stalling making payment. The weight that a debt collection agency can bring can often be enough to encourage customers to pay. This approach also allows you to maintain customer relationships whilst showing that you take late payment seriously. So, if you continue to trade with the customer they will be less likely to give you the run around again.

Of course, every debt needs to be assessed individually but always remember the longer you wait before contacting a debt collection agency the less likely it is that you will successfully recover your money – so don’t waste a second more.

If any of these situations sound familiar and you’d like to discuss your debt collection requirements, please contact our team on 0800 9774848. Or get a quote to see how much we would charge for successfully collecting your overdue payments.

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