With the entire world walking towards a universal slowdown, recovering payments have seriously become a point of concern for many businesses, especially startups and small businesses. According to Bloomberg, 80% of the new businesses fail in the first few years of operation, plainly because they ran out of cash.
If you still don’t consider debt collection as one of the most important aspects of businesses, you are already digging your own grave. A pile of bad debts or unpaid debts can not only hamper your financial health but can also put you off the books of investors. Hiring a debt collection agency can save you from this crisis.
Most of you must be already asking why should I hire a third party debt collection agency and not operate on our own. Here’s why –
Bouncing Cheques – Not a problem!
According to Ernst & young, there are more than 500 million cheques forged annually which amounts to losses with more than $10 billion. So, if you are also one of the victims, it is a tell-tale sign that it’s time you need to hire a debt collection agency or an attorney for debt collections. Professional debt collection agencies analyze the past financial history of the client, avoiding slow payers for you.
Getting rid of unpaid bills
Timely debt collection must be a top priority for every business. The longer the debt stays, the slower the process becomes. Apart from this, once the customer starts delaying beyond a specified limit, you cannot expect the full payment. Statistically, once the bill is delayed for 90 days, you approximately lose 10% of your unpaid commercial balances.
This is when a debt collection agency kicks-in, it streamlines the entire payment procedure followed by regular follow-ups. Follow the golden rule of ‘Timing is everything’.
No more multiple payment failures
If you have just one customer who has failed to pay you, you can still work out the repayment procedure all by yourself. But, if you have a list of clients with multiple payment failures, it’s your business screaming that you need a third-party collection agency.
Your usual credit control process is not serving the purpose. And, if there has been one failure, there is potential for more. Not just this, hiring a debt collection agency is in your best interest because if you go by doing things yourself, you are diverting yourself from the regular course of action of the business.
Familiarity with collection laws and regulations
We all know how important it is to stay on the right side of the law. The thing with debt collection is, there is no universally standardized set of rules. International debts or local debts, every country follows its distinct set of rules, and as a business owner, it is very difficult to be aware of each of them.
A debt collection agency is well versed with all the laws of the country your debtor resides in. They not only help you recover your payment, but also mitigate risks.
Traces customers who have fallen out of contact
Did you know, total debt returned to creditors in 2013 by third-party collection agencies was $55.2 billion, with a net return of $44.9 billion?
With that massive figure stated above, you can imagine the number of businesses who resort to third party collection services. One of the major reasons is that they possess the necessary expertise to track down customers who have plainly vanished. Most agencies have a skip tracing department, for tracking customers and debtors, who are avoiding all means of communication.
Collects payments from customers spread in different areas
If you have customers spread over a large geographical area, debt collection is a different ball game altogether. It becomes far more difficult to reach out to them than it is for local customers. Debt Collection agencies serve you in this situation also with their professional expertise and industry experience.
For startups with limited resources and budgets, the non-recovery of debts can be a major setback. Hiring a debt collection agency might cost you extra cash, but it will be definitely worth it.
