Prepaid loans, energy companies, vehicle finance, and insurance are just a few examples of sectors that often manage a high-volume of debtors simultaneously, each presenting their own set of challenges.
In this blog, we’ll explore some of these challenges and how debt collection agencies can offer solutions.
Resource allocation
While some companies have dedicated departments focused on recovering money owed, many don’t, and even those that do often struggle with the sheer volume of accounts they need to manage.
Outsourcing, or partially outsourcing, to a debt collection agency can alleviate this burden, allowing your employees to concentrate on a more manageable workload, leading to increased productivity profitability.
Legal compliance
Legal and regulatory compliance within debt recovery can often be complex and filled with jargon. This can be difficult to navigate and may lead to errors in written communications or when advising both clients and debtors over the phone. Debt collection agencies possess specialised knowledge in legal and regulatory compliance, staying up to date with changing regulations. This expertise allows them to efficiently navigate the intricacies of debt recovery and ensure that all actions are compliant with the latest legal standards.
For example, our audit team ensure we remain compliant and adhere to regulations by regularly reviewing our processes, conducting thorough audits, and implementing necessary updates to align with the latest legal requirements. This reduces the risk of costly mistakes and enhances the effectiveness of our debt recovery efforts.
Cost efficiency
According to The Association of Credit and Collection Professionals (ACA International), “…agencies recover about 20 - 30% of debts after a 90-day period. In contrast, in-house efforts tend to see diminishing returns the longer the debt remains unpaid.”
Debt collection agencies take a focused approach to recovering what’s owed to you and often have dedicated teams to recover high-volume debt. For example, our Collections+ team are solely responsible for managing accounts with high volumes, which allows them to utilise their expertise and resources to efficiently track, contact and negotiate with debtors. This focused approach not only improves recovery rates but also accelerates the recovery process, ensuring that outstanding debts are resolved more quickly.
Preservation of customer relationships
Let’s be honest, asking for money you’re owed can be awkward, particularly in a business context. Debt collection agencies alleviate this discomfort by serving as a neutral third party, managing collections with the utmost professionalism. Their involvement helps preserve valuable business relationships by ensuring the debt recovery process is handled impartially and respectfully.
Moreover, their expertise in communication and negotiation ensures interactions with debtors are conducted in a manner that minimises conflict and promotes cooperation. Some debt collection agencies offer a more tailored approach for specific industries. For example, Redwood Credit Management, a service under Collections+, provides a softer approach for businesses in the funeral industry and considers vulnerable customers by offering more flexibility for repayment. By delegating this task to professionals, you can maintain positive client relationships while ensuring outstanding debts are recovered efficiently.
Choosing the right debt collection agency
Selecting the right debt collection agency is crucial for efficient debt recovery. Look for agencies with a proven track record, high recovery rates, and positive client testimonials. Ensure they understand relevant regulations and have professional accreditations indicating high standards. Advanced technology and legal expertise are also important for efficient and transparent collections. Consider their customer service, ensuring they communicate well with clients and treat debtors respectfully. Evaluate their cost structure for transparency and performance-based fees.
By considering these factors, you can choose an agency that recovers debts efficiently while maintaining your reputation and compliance standards.
Contact us today to learn how Collections+ can assist you in your debt recovery efforts and help your business grow stronger.
