Debt collection agencies act on behalf of creditors to recover from overdue accounts. Recognized agencies operate within specific guidelines and adhere to the legal framework established by the Debt Recovery Act, the federal law that regulates all debt collection agencies.
There are several benefits to using these agencies –
o they eliminate the hassle of pursuing debt from your business and save time and money;
o Third-party debt collection has proven time and time again to improve your chances of recovering your money; these people are specialists in negotiating with debtors, and the results usually speak for themselves;
o Potentially a skilfully negotiated debt collection could mean continued future custom from the debtor;
o Debt collection agencies can combine sales book management and debt collection;
o debt collection keeps you within the law …
The disadvantages are –
o debt collection costs money; you are dealing in debt collection against any fees made by the debt collection agency and / or a percentage of the money collected (although there are lower costs, fixed fee options);
o The Debt Collection Agency creates a relationship with your customers which can be potentially harmful if they evoke this relationship by not handling invoices in a polite and diplomatic manner …
Finally, remember to choose a collection agency with a good reputation. Don’t just buy the best price. Remembering less reputable agencies can damage your own reputation as well as your wallet.