Your intentions in keeping debts in-house are likely good. We often hear from customers who’ve let debts languish, believing they’d save money or that using a third party would alienate their customers. However, just the opposite is true.
Here are the top 5 ways a reputable professional debt collection agency can improve profit recovery.
1 – Freeing Staff and Resources
Tracking and following up on payments, sending out additional correspondence, and making collection calls can be overwhelming or uncomfortable for employees. Using a professional collection agency frees your staff from this. Additionally, collections regulations are increasingly complicated, and your staffers, without specialized training, can easily cross a line.
2 – Better Information
Debt collection companies have access to current address information and collection software that other businesses typically don’t. If the consumer moves, in-house efforts usually fail, but services like skip tracing (finding someone who left town) are standard for collection agencies. Collection staffers are also well trained and more experienced in the most effective ways to find consumers and to request payment.
Remember, the prime time to collect is now – the longer a debt languishes, the less likely profit recovery becomes. However much the debt is, plus your expenses in trying to collect, is money that might be entirely lost because ineffective collections tactics are used while the debt ages.
3 – Raising the Priority Level
Communications from a third party debt collection company are less likely to be ignored. You’re showing that your business means business! Collection letters and calls also clearly inform the debtor what the next steps are.
4 – Avoiding Legal Pitfalls
Rules and regulations protecting debtors must be followed even if the business is collecting for itself. Those residing in different states may have different rights. Privacy and healthcare acts can also affect how a business collects. Reputable collection companies are well versed and experienced in compliance.
5 – Increasing Levels of Service
Contingency-based collection calls are not the only services available. Flat-fee services can be an affordable alternative to paying the standard 25 – 50%.
Using a reputable third-party collections agency, particularly one offering a flat fee structure, can greatly improve your profit recovery rate. For more information, see our white paper “Choosing a Collection Agency.”