Despite the chances of debt recovery going down by at least 10% for every 30 days of delay, some Australian businesses still hesitate to involve a debt collection agency to retrieve accounts receivables. Collecting debt is important for any business as the outstanding accounts could add to the positive cash flow and keep the business operating. Whenever paid full and on time, a business can use such funds to expand operations or invest further in staff, hence accounts receivables need to be treated with importance. If you own a mid-size business and are still hesitant about outsourcing debt collection, we have put together some good reasons why it is better to let a collection agency manage your accounts receivables.
As business relationships matter, outsourcing your collections is a professional way to work together since you don’t have to make that awkward call to seek payment or keep sending strong messages to make clear you want to get paid. If the customer has already kept your financial department busy by writing several letters, a letter of demand sent by a collection agency is rarely ignored. By outsourcing the debt collection to an agency, you might benefit from the so-called “third party effect” where the debt collector comes in new and acts on the behalf of your company. As already discussed above, letting a debt collection agency manage payments due is not only effective but makes good business sense. This way you can spend time with your client and maintain the good relationship by focussing on your sales opportunities rather than discussing late payments.
Commercial debt recovery demands certain training and your financial department might not have the communication and negotiation skills, let alone experience, to secure the best outcome. Debt collection is a sensitive matter where things can easily get complex, emotional and escalate quickly hence it is better to leave an expert to deal with the situation. If you own a mid-sized company, chances are your financial department does not even have the human resources to keep a close eye on outstanding payments on a regular daily basis. Furthermore, may the ever-changing laws and policies in commercial debt collection make it difficult for your in-house department to keep track of legal matters and they might not be able to deal with complex collection scenarios the way a professional does.
Because regulations might differ from state to state, you also run the risk of putting your reputation at risk by applying the wrong law. Hence it makes sense to leave debt collection to experts who know all the laws by heart and keep track of changing policies. Not only will a professional have more practice in the field of collecting debt, an agency will have the latest technology to keep track of progress to ensure best results. These tools allow the agent to further access in databases to track down debtors that your in-house team might not be able to. By getting a professional debt collection agency involved, your finance department can focus on operating your business and not get distracted by having to send follow-up emails and leaving answer phone messages.
On the assumption, all of the above has not convinced you enough to outsource debt collection, mind the operation overheads. Paying an in-house debt collection team is not only costly when it comes to wages, there are hard costs involved which certainly add up. Think about workplace space, electricity, compensation and superannuation as well as regular out-house training to keep up to date with the policies. Involving a debt collection agency means only paying for work on demand and not on a monthly basis.