A standard debt collection agency works on behalf of businesses to help collect any overdue accounts reaching over the specified terms. Typically business terms are net 30, so anything extending into the 60-90 day range is concerning.
There are several reputable agencies that adhere to legal framework so that your business will not have legal issues. It is very important to find a reputable agency to represent your company because they follow the Fair Debt Collection Practices Act.
There are several pros and cons when thinking about using a debt collection agency:
Pros:
1. They save the business, especially smaller businesses time so that efforts can be placed elsewhere. One of the hardest challenges of running a business is collecting on every account. By using an debt collection agency correctly, you can collect on almost every account.
2. Debt collection agencies keep you within the law. There are so many legal rules to protect debtors and there is a fine line to collect your money.
3. Having a third party involvement. Companies might have people sending letters, invoices, or calling the debtor and getting empty promises or avoidance. Once the third party is involved, it places your business on the top of their priority list. If you have a priority list for your life when it comes down to bills, what is at the top? Mortgage, car payment, insurances, food, etc. When you get that third party involved, your debt moves from the bottom of the list towards the top because of the unknown factor. The debtor will ask what will happen to me? What will happen to my credit?
Cons:
1. Debt collection agencies aren’t free, so therefore they cost you and your business money. Instead of forgetting the debts and clearing the books, it’s imperative to collect on the majority of the debts out there.
2. If you use a harsh agency, your reputation as a company could be at stake and the relationship with the debtor is over.
Under consideration with the cons, there is a solution to make the cons all into pros. There are a few flat rate services out there that you pay a very low fee per account negating the huge percentages. As for the second con, there are many ways to go about collecting the debt from an account to account basis. By using a more diplomatic or intensive approach, you can tailor to any person or industry.
Article Source: Stephen Long – www.ezinearticles.com
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