The Importance of Compliance in the Collections Industry
Unpaid debts are on the rise, but whether or not to hire a collection agency is still a valid question for many business owners. If you have a high volume of uncollected debt, the answer is obvious, but many businesses fall into a gray area.
Collecting In-House
If you’re unsure about whether to hire a collections agency and don’t have a contract with one now, you’re probably trying to handle the effort in-house. In addition to the amount you may have lost from this nonpaying client, you’re now spending money on supplies and on redirecting staff time to collections efforts. Could your staff be doing something more productive to earn new business or service existing clients instead of chasing down old business? You bet!
Even worse than the money and time, your staff is not as well trained as agency staff to handle debts collection carefully. Collections are heavily regulated, with state-specific laws that change often, so it’s easy for untrained personnel to step over a regulatory line. Perhaps they called your client too often or before the allowable time. Perhaps they told the person that answered the phone why they were calling instead of verifying they had the right person on the line. There are many ways to go wrong.
What do they do if they can’t reach the customer? What if the customer skipped town, for example? A collections agency has the resources and techniques, like skip tracing, to drastically improve your investment-to-return ratio.
Here’s a final consideration about in-house collecting. If your staff has reached the client, but they still haven’t paid, what then? Outstanding debts are less and less likely to be resolved the older they get. How does your staffer up the ante to get the debt off the books? Chances are, they have few ways to do that. You could seek a judgment, of course, but that usually involves legal knowledge or lawyers plus more staff time.
Writing Off the Debt
Perhaps, for all the reasons we just detailed, instead of handling it in-house, you’ve let the debt languish. After all, it would probably cost a lot to hire an agency, right?
It might, depending on which agency you choose. Some agencies take as much as 50% of what they collect and many pile fees on.
However, you might be very surprised at just how affordable debts collection can be. Agencies that collect for a low flat rate offer a different model than traditional agencies. For an amount that might be less than one staffer’s work for an hour, an unpaid debt could be professionally collected.
Hiring a Collection Agency
So what’s the answer to whether you should hire a debts collection agency? For all the reasons above, it’s yes.
We’d have to do an individual evaluation to be completely certain, but chances are good that if you have ANY uncollected debt (even just 2-5%), your business would benefit from hiring an agency.
If you have unpaid client debt, even a small percentage, we’d like you to consider Optio Solutions. We offer very affordable solutions that work (the numbers prove it). We offer more than results, too — like a downright aggressive service philosophy. We get involved early and educate our clients on everything they need to know for us both to be successful in the collections effort. We understand your customers are important, and we work ridiculously hard to ensure they feel good about how they’re treated.
There’s no reason to let old debts languish.
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