Running a business has its fair share of challenges. First, you have to decide what sector you’re specialising in. Then you need to find the right team. Next, you have to ensure your team has perfected the goods or services that you intend to provide to your customers.
And that’s the easy part. The hard part is chasing payments. In some businesses, it’s a bit easier to get paid. If for instance, you’re in the retail or fast food business, then you can operate on a cash first basis. For any other sector, whether it’s à la carte restaurant or car hire, you have to trust your customers to pay for what they use.
Sometimes, when your customers don’t pay up, you’re forced to involve a third party. Debt collection is a thriving industry and it ranges from shifty types who hang around your debtor’s car to professionals in business suits and executive vocabularies.
The kind of debt collector you hire is very important. If you hire a thug, they might get your cash back, but they will likely leave your reputation in doubt. As much as recovering debts is crucial, keep in mind that you need to keep your business running, and customer perception is a big part of that. Select an agency that is respectable and law-abiding in their methods.
Good debt collectors support you throughout the process, from payment requests to potential litigation. A reliable agency will have a partnership with a reputable law firm, just in case you need legal services. Such debt collection agencies will even arrange for you to get discounted legal fees. It’s all part of their cash recovery package.
You might wonder whether you can afford this kind of debt collector, or whether it wouldn’t be easier to get your rugger-playing nephew to knock on your debtor’s door. This is a bad idea on several levels. One, it’s illegal, and your debtor can successfully sue you for harassment. Two, it leaves a bad impression about your business.
If you’re worried about the potential cost of a debt collection agency, shop around. There are many responsible agencies whose clients range from individual cases to large corporations, and they have tiered packages to accommodate all their customers.
Once you’ve selected a debt collection agency, don’t just wipe your hands off the matter. The agency is working on your behalf, so it’s important to work with them for best results. It makes the agency’s work easier, which improves your chances of getting your money back.
Debt collection agencies are experienced at getting unwilling debtors to fork over the cash, but that’s not always the case. Sometimes a debtor finds themselves in a bind. It’s not that they don’t want to pay. It’s that for some (legitimate) reason; they’re unable to.
An agency might manage to convince them to adjust their payment plan, but the agency can’t do this without your guidance or sanction. In such cases, the debt collector is a go-between. Think of them as a mediator at best … and a referee at worst. Work with them (and your debtor) to come up with a payment plan that works all round.
Another factor to consider is while debt collectors have generically effective collection techniques, the debtor’s business relationship is direct with you. You’re the one that knows who they are, what their capabilities are, and how best to deal with them.
Say for example your customer has a young family or elderly parents. Your debt collector doesn’t know this. If you give them this kind of information, they can use it to work out an amicable arrangement for repayment. Stay in touch with your agency regularly and give them any details they require. It could be what ‘breaks the case.’
Debt collection can take anything from a few days to a few months. Working with your agency helps the process run faster. It will also help you see how things are panning out so that you can shift tactics.
For instance, if a debt collector is unable to recover your debts, they will write an official letter to inform you. However, if you’ve been working with them all along and following their progress, you’ll know how things are going and won’t be caught by surprise if things don’t work.
Plus, everybody likes cordial colleagues, so professional camaraderie makes life easier for everyone. You don’t have to make friends with your collection agency, but harmonious partnership does make things run smoother, and you never know when you’ll need a favour.