Putting an overdue debt in the hands of a debt collection agency can seem like a big step, particularly if the debtor is a valued customer. So, when you make the decision to seek professional debt collection support, it's important to be sure that it's a course of action that can deliver results.
A good debt collection agency will be focused on achieving positive outcomes, while acting professionally and with integrity to protect your reputation. And, sometimes, introducing 'third party psychology' is enough to get results. There are many documented cases where the creditor has been chasing the debt for some time without success, yet one or two letters from a debt collection agency does the trick.
That being said, there are several factors which can make a significant difference to the potential effectiveness of a debt collection agency, so it's a good idea to make yourself aware of these before you take the next step.
Have you taken legal action?
As a general rule, having the legal authority of a County Court Judgment (CCJ) to support their efforts can increase a debt collection agency's chance of success. The CCJ alone may be enough to help persuade the debtor to settle their overdue account. If not, there are several additional courses of action that can be taken, from obtaining a charging order against a debtor's property to, as a last resort, instigating bankruptcy proceedings. Read more in this blog post.
No sign-up fee
There's no better incentive for a debt collection agency than getting paid based on results. A commission-only basis with no upfront joining or handling fees is a business model that works well. In addition, the best type of charging structure will offer a fixed commission rate, whether it takes the agency a single day to recover your debt or an entire year, which means it's in their interest to act quickly and efficiently.
Attention to detail
The integrity of your paper trail can be a key factor in a debt collection agency's performance. That means having robust systems in place to ensure your quotations and invoices carry all the relevant information including accurate client contact details and clearly expressed terms of business. It's also a good idea to obtain purchase orders wherever possible, particularly if you're dealing with a large corporation. In some organisations, delayed payment can simply be the result of faulty admin, rather than a reluctance or inability to settle a debt.
