Debt collection and debt collectors can often be two phrases that generate certain connotations with people and businesses. However, unfortunately, these usually come with a range of stories and outdated information.
In business, keeping your cash flowing is essential. But this can be difficult when some customers continue to pay late or refuse to pay at all.
Professional debt collection agencies prove themselves a valuable resource to businesses time and time again. Supporting businesses of all sizes with late payment and overdue invoices – ultimately supporting you in managing your cash flow.
However, with some debt collection myths still surrounding the industry, many people are still unsure whether using a debt collection agency will help or hinder their business.
Below, we look into some of the most common commercial collection agency myths vs reality.
Myths about debt collection
Myth: Debt collection is expensive
Reality: Most commercial debt collection agencies work on a successful basis, meaning they only get paid when they successfully collect on the debt. This expense, when compared to how much you would lose if you wrote the debt off entirely, is probably minimal. In addition, most professional debt collectors will also be successful in collecting late payment fees and interest charges which you can use to help cover the cost of instructing a debt recovery agency.
Myth: Debt collection agencies only take on big debts
Reality: Debts, no matter the size, can be recovered quickly and effectively. The focus is on supporting your credit control team and internal processes and procedures.
Myth: Our customers won’t like it
Reality: Good commercial collection agents will often go above and beyond to maintain good working relationships with your customers. At Direct Route, we work hard to manage your brand and reputation while still collecting outstanding invoices and late payments.
Of course, some customers may not like to be contacted by a collection agency; however, most understand that you have only done so because they haven’t paid in the first instance.
Myth: You don’t know where the debtor is
Reality: Professional debt collectors use various tracing methods to locate even the hardest to find debtors. With access to a range of updated systems and software, professional agencies have everything at their fingertips to help you recover your overdue invoices.
Myth: Only big companies use a commercial collection agency
Reality: Thousands of small businesses work with collection agencies. This is because not only does it bring a level of expertise to a particular area of your credit control processes, but it also prevents you and your team from being taken away from getting on with your regular job. Using a debt collection agency is also more likely to result in a successful collection. To find out about the various types of businesses that use a collection agency, check out our recent post HERE.
Myth: Debt collection agencies only collect on old debts
Reality: The earlier you refer any overdue payments, the better chance of a successful collection. Helping you to avoid wasting valuable time month after month chasing a debt that is becoming harder and harder to collect.
Myth: The debt is too old
Reality: Debts can be collected for up to five years from when they are first due (however, please note, after a period of six years, debts can become Statute Barred under the 1980 Limitations Act).
Myth: A solicitor is more effective
Reality: Instructing a solicitor can be costly and time-consuming. That’s why it is often recommended that a debt collector is instructed before any legal action is taken. Working tirelessly to ensure success, a professional debt recovery agency has the expertise and experience to help.
Myth: A debt collection agency will ruin my businesses reputation
Reality: Building debt collection practices into your credit control processes can help to enhance your credit team and add to your in-house collection efforts, respecting your brand, reputation, and processes.
Myth: Debt recovery is complicated
Reality: It doesn’t have to be. Working with experienced and professional teams with robust processes in place makes debt collection and the credit-control arena extremely straightforward. Working on one-off projects or as part of your extended credit control team, commercial collection agencies are extremely flexible and agile in various situations.
Myth: Debt can be inherited
Reality: When somebody dies, the deceased’s debt does not become someone else’s responsibility; contact will be made via the deceased’s estate to seek payment.
Myth: Debt collection agencies and debt management agencies are the same
Reality: They couldn’t be more different! Debt management companies manage a customer’s debt and secure lower repayment rates. Whereas, debt collection agencies seek to recover debts on behalf of their customers.
With various debt collection myths to battle through, Direct Route is here to help provide you with the right information. Helping you and your business recover overdue invoices and late payments effectively and efficiently, we can work independently or as an extended part of your credit control team.
The earlier you contact our team about your late payments, the better your chance at successful collection.