Is your business handling too many delinquent accounts? Are you finding it a struggle to pursue even one of them? This can spell trouble for your business. Not handling your accounts properly can burden your operations, making it harder for your business to grow. In most cases, one of the most common reasons businesses find it hard to pursue delinquent accounts is that they don’t have the staff and technology for it.
Your business should be able to follow up on these accounts and maximize each of their recoupment if you want to get your money back. That said, if your business is one of them, there’s one good solution: debt collection agencies. So what are debt collection agencies, and how do they work?
What is a Debt Collection Agency, and How Do They Work?
Debt collection agencies take care of pursuing accounts that have overdue credit from the creditor. These agencies have staff called debt collectors who get the money or discuss paying them personally for the business. Of course, the staff is trained, and some can even be attorneys.
The debt collection agency acts as a middleman for the creditor and the borrower, and depending on the repayment terms, they will handle any debt that is past 60 days of the due date. After a successful repayment, the creditor will pay at least 25% or even 50% of the overdue payment as the fee for the agency. Now that we know what debt collection agencies are and how they work, let’s discuss why you should hire them.
Flexibility and Accessibility
There are a lot of debt collection agencies that you can find on the internet nowadays. It’s a big and competitive industry, so it’s easy to find one that will suit you. Luckily for us, there are many debt collection agencies everywhere. You can find one in Illinois, California, or even Nevada. Or if you’re in another country like Australia, it’s pretty much the same.
If you’re in Sydney or Melbourne, you should look for an agency that’s easy to contact for services. Thankfully, there are a lot of services every debt collection agency sydney and other cities in Australia has to offer. All you have to do is look for the one that fits your business needs.
Debt collection agencies have different programs for creditors to benefit from. Not to mention that they can fit their services according to the creditor’s needs as they know different businesses have different niches. That said, chances are that there is a program that heavily suits your situation and business model.
There’s a plethora of laws and regulations that the debt collection industry has to follow, and most of the time, if the borrowers think that their rights are being ignored, they will not hesitate to sue. So, to eliminate the risk of a lawsuit or any other potential violation of the law, your business can hire a debt collection agency.
These agencies are well-versed with the law surrounding debt collection, both in national and in each state law. They can even show you a license to prove that their agency and staff are trained to be well-versed with the law, not to mention just now that some debt collectors are even attorneys.
Rate of Success is High
Sometimes, when we ask for our money back, some establishments will mix up some poor excuse to not pay you or even find a loophole for them to avoid paying you entirely. Of course, this is problematic as there’s a huge chance you’ll never get your money back.
However, with a debt collection agency, there’s a massive chance of successful debt recovery. This is because these agencies have trained professionals who know some techniques and strategies to help the borrowers pay back the creditor. They are also familiar with all the fair debt collection practices, and will make sure that everything is done without any potential collection problems.
Not to mention that debt collection agencies pose a much more significant threat than creditors. Creditors can only report these accounts to credit bureaus, but once a debt collection agency is sent for the borrower, the borrower’s credit takes a much greater hit. Moreover, a negative score from a debt collection agency usually lasts up to seven years, which is convenient enough to coerce the debtor successfully.
One misconception about debt collection agencies is that their industry is just about collecting debt. Well, that’s not the whole story. Debt collection agencies aim to settle debts, which means not only do they put out advice and services for the creditor, but they can also help the debtor to settle their debts. So it’s not a soulless industry; we can tell you that.
Debt collection is probably one of the most complex business accounting aspects. Luckily, many debt collection agencies are ready to help us. With their help, debt collecting has never been so easy these days.