Essential Tips for Working with a Debt Collection Agency
For businesses, taking on debt and/or extending credit is often necessary to drive growth and move the organization forward. Unfortunately, sometimes accounts can become delinquent. This leaves companies in need of a professional debt collection agency to recover their monies. Working with a reputable debt collection agency is essential if you want to efficiently and effectively manage unpaid receivables without putting a strain on other aspects of your business. The benefits of working with such professionals includes increased understanding of the process, improved overall financial health, maintaining a continuous positive cash flow and potential savings on compounding interest.
According to various sources, an estimated 100 million businesses worldwide use collection agencies regularly to recover overdue debts from customers and clients. With more than 50,000 collection agencies operating globally, it is important for businesses to be aware of the process and ways to ensure successful debt recovery. Here are seven tips for businesses working with a debt collection agency:
1) Research Collection Agencies: Research different collection agencies to find one that best suits your needs. Make sure you understand how the process works. Know their fees structure and whether or not their practices are compliant with state regulations regarding fair trade and consumer protection laws. Check out Statewide Credit’s accreditations here.
2) Set Up a Timeline: Establish a timeline so you know when payment is due and when you should begin seeking help from a collection agency; should payments remain delinquent past the established timeline.
3) Prepare Your Paperwork: Ensure all documentation related to any loans or debts is available and properly filed prior to engaging with a debt collection agency. Having this information up to date will make it easier for collections agents to identify where they need to start in the process of recovering funds owed to your business.
4) Send Documents Prioritizing Larger Debts: Prioritize which documents should be sent out first by separating smaller amounts owing against larger ones that may have been unpaid for longer periods of time – this allows agencies to prioritize which cases require much more attention so that funds can be recovered as quickly as possible. In addition, a priority needs to be made to turn over aged debt to the collection agency. Debt is not like a fine wine; it will NOT get better with age. On the contrary, each state has their own statute of limitations. You do not want that precious debt to age before the collection agency is able to do anything for you. Check the statute of limitations in the particular state where your debtor is.
5) Be Aware Of Contact Timeframes & Limits: Understand when contact is allowed vs prohibited by law. Many states have laws protecting borrowers/consumers from aggressive tactics from collectors. Being aware of state guidelines will ensure you’re protected from legal actions brought up against your business by consumers.
6) Implement Internal Policies To Mitigate Future Debt Collection Issues: Put proper policies in place internally that allow for closer monitoring of repayment schedules; try implementing systems like recurring bills or automated reminders for both employees & customers about upcoming payments.
7) Utilize Technology To Support Collections Processes: Consider leveraging technology like cloud-based software solutions that provide customizable services & reporting capabilities that support each stage of collections processes while helping reduce manual work & costs associated with recovering outstanding debts. Working with a debt collection agency can be an intimidating prospect for businesses, but the benefits of leveraging the expertise and specialized services that a debt collection agency offers far outweigh any potential hesitations. By carefully researching available options and engaging a reputable debt collection agency with clear expectations, businesses can enjoy improved financial health, greater understanding of the process, and cost savings overall. Following these essential tips will ensure that your business is well-positioned to manage delinquent payments in an effective and professional manner.
Sources:
Deloitte Insights
Forbes
Experian