In most cases, businesses avoid using an external collection company in favour of using untrained and in some cases, unwilling members of staff and failing to recover what is owed to them.
Even if a business has an experienced credit controller, without an escalation process in place, many debts will be paid late or will go unpaid forever.
The decision not to instruct an external collection company can be one of the worst commercial decisions any business owner could make. Not only does it have a negative impact on your cashflow, it often leads to an increase in the number of bad debts. It is a simple fact of business that your debtors pay more quickly following contact from an external collection company.
The Myths of using an external collection company:
- I will lose all of my customers or clients
- I think we can do this in-house and save money
- It is going to be expensive
The Realities of using an external collection company:
- We understand how daunting it can be when deciding to take action to recover a debt from one of your best customers or clients. We take a firm but diplomatic approach and wherever possible we recover payment and resolve any problems, without you losing the customer or client. However, you should bear in mind that customers and clients who do not pay their debts may not be as valuable as you thought! Good customers and clients, in our experience, will often wish to retain the working relationship long after the debt has been paid.
- Most staff members do not like dealing with credit control and therefore do not prioritise it. As result, it is either not done well or in some cases, not at all.
- Using a specialist debt collection company is not as expensive as you might think. We do not charge any subscription or administrative fees and only charge a percentage of the actual debt collected. Legislation also allows you to recover interest and compensation as well as reasonable recovery costs. (your own terms of business might also allow you to recover such items) meaning that it may actually cost you nothing at all.
So if you have any overdue accounts, ignore The Myths, focus on The Realities and make that good commercial decision to use an external collection company.