How to find the best debt collection agency
If you are having trouble recovering customer debts or you have customers who are refusing to pay your invoices, it’s probably time to get professional help. Outsourcing your debt collection or management of your overdue accounts allows you to focus on running your business and can actually save your company time and money.
There are many agencies to choose from and given the mixed reputation of debt collection agencies in Australia, it’s important to choose wisely. In researching your options regarding which agency to partner up with, you should consider a number of factors.
Protect your company
It’s absolutely critical that the debt collection agency you choose will preserve your brand and company’s reputation during the debt collection process. A reputable collector will always act professionally and deal with customers the right way to ensure no damage to your reputation and allowing you to maintain valuable customer relationships. It’s vital that your agency does not engage in harassment or other illegal methods of attempting to recover debt given the strict laws regulating collection.
It can also help to distance your business from any potential negative interactions with debtors, and prevent your company inadvertently becoming liable for illegal debt collection conduct. An experienced debt collection agency should adhere to and completely understand the official debt collection guidelines and regulations around acceptable debt collection behaviour. They will always ensure appropriate conduct in engaging with debtors and thereby limit any liability to your business.
Agency accreditation and reputation
To ensure you are choosing a reputable agency, check they are accredited with the Institute of Mercantile Agents, the Australian Institute of Credit Management and ACA International.
Debt collection best practice
A good agency adopts best practices in order to collect debts faster, whilst acknowledging the best techniques and strategies that actually deliver results. Reputable agencies also have access to industry leading technologies and tools to enable them to either track down hard to find debtors or convince them to pay quickly.
When evaluating which collection company to engage, consider factors such as how many years they have been in business, how experienced they are within your industry, whether the agency has any industry memberships or how many clients they currently service, as this is a great indication of their success and results at recovering outstanding debts.
Best fit for you
In deciding which agency is the best fit for your business, consider the type of debt (personal or commercial), the amount and size of claims you have, as many collection agencies specialise in certain types of collection.
Don’t be afraid to ask questions of a potential agency. Questions you might ask include: How does the agency report to you? How long do they usually take to recover debt? When do you receive the money recovered? How flexible is the agency with the approaches it uses—do they consider the specifics of your business and claims, and customise their approach, or are they unwilling to make changes for you? What is the procedure if litigation needs to take place?
Professional fees
Fees vary greatly, although majority of agencies offer a ‘‘no collection, no commission’ service which can help you avoid costs if collection is unsuccessful. Compare fees, commissions and any other hidden charges, and make sure you see a written agreement clearly stating all costs.
Success rates
It can be tricky to establish how successful an agency is at collecting. Debt collection is a tough industry and success rates vary greatly. But always be aware of agencies making inflated claims such as “90% success rate” when there is actually no real way you can verify this. Ignore generalised statements about success rates which are usually sales tactics and have no real substance.
When seeking debt collection services, you want to be clear about who you are partnering with. By doing your research and selecting a reputable and accredited collection agency, you will not only be protecting your cash flow, but your professional reputation too.