Why debt collection companies are better than lawyers
Who is best to recover debts for your business?
Debt collection requires time and resources (both human and financial), but more importantly requires a clear process to recover those much needed funds. Chasing a debtor to collect your hard earn cash is never an enjoyable experience and unfortunately, even with an established internal debt recovery process in place it’s not always guaranteed you’ll recover the debt – so you need to consider the options available.
When it comes to debt collection, businesses need to know who to turn to: a lawyer or a debt collection agency? While every business has different needs, it’s important to consider ‘what’ – or more specifically, ‘who’ – is best for your business.
Jim Collins, a motivational business speaker and best-selling author of From Good to Great, talks often of the importance of having the right people “on the bus” and encourages business owners to continuously ask, “first who, then what” when it comes to business.
“You are a bus driver. The bus, your company, is at a standstill, and it’s your job to get it going. You have to decide where you’re going, how you’re going to get there, and who’s going with you,” writes Collins.
“Leaders of companies that go from good to great start not with ‘where’ but with ‘who.’ They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats.”
So, when it comes to taking care of cash flow and settling those unpaid debts, who is the best ‘who’ for your ‘bus’ (business)? A lawyer or a debt collection company?
Consider this: a debt collection company has debt collection not only in name but as their specialty and core focus, unlike a lawyer who may have competing tasks at hand. The right debt collection agency will work with your business – efficiently and ethically – to ensure your cash keeps flowing.
One of the major differences between engaging a debt collection agency versus a lawyer is cost. The majority of debt collection company’s fees are predominantly linked to a performance based model, whereas lawyer’s generally charge a flat hourly fee which can add up significantly fast. A collection agency’s model of “No Collection, No Commission” is more advantageous to businesses seeking debt collection services as they will only get paid if they recover the debt – so it can be assumed that they are more motivated to achieve the best outcome for your business. There is also flexibility and room to tailor their fees to the needs of your business – a welcome advantage for those with cash flow issues! Another benefit is when debt repayments are drawn out, an agency’s commission-based fee structure will again save you money over a lawyer’s hourly rate.
Who to choose for debt collection?
In Australia, there are obviously many debt collection companies and lawyers who can offer recovery services, so who do you choose? Choosing a company in the local area has its advantages, but not necessary crucial. If your company is located in Sydney, engaging a company of debt collectors in Sydney can give you direct access to them but also have someone on your side that is well acquainted with the local area, the top law firms and local courts.
So, who is your ‘who’ when it comes to debt collection? Securing a specialist, it seems, is key. Even more so one with a fee structure that will best suit not only the tasks at hand but also your business. A good debt collection agency might be a better fit for your business than a lawyer if these are your priorities.