Unfortunately, hiring a debt collection agency has become imperative for many Australian businesses due to a large number of customers not paying their invoices on time. These services are experts in retrieving debts that are past due and in extreme cases may even seek legal help on behalf of the creditor. Handing bad debt over to third parties comes with many benefits, but most importantly it takes the stress off an in-house collection team, which can then focus on more important things like the daily operation of the business. To be able to choose the best collection agency for your business, we have put together some tips for you.
Business to business debt collection services, also known as B2B, have specialized in recovering debts owed by one business to another. They are different from consumer collection agencies, which collect individual consumer debts owed to a business and therefore often have a slightly different way of approaching the debtors. If you have accounts receivables from both commercial and individual customers, you may consider hiring two separate collection agencies or one that is capable to deal with both to help you retrieve debts in a timely manner.
When looking for an appropriate collection agency, one of your key concerns should be their success at collecting. Before hiring, it is very important to take a look at ratings by former clients to learn about their experience with the potential agency and ask for recommendations from your accountant or trusted business associates in your industry. Make sure that the agency you want to work with has a decent track record of success.
The age and size of debt that needs to be collected are crucial in debt collection as payments which are 90 days past due are less likely to get recovered the more time passes. Once you have worked out the average on the amount of debt owed you can find an agency that specializes in that particular range, furthermore it helps you to estimate whether you will be working with a small or large agency. It is important to know the focus and services your potential agency offers as areas and expertise might not be the same or not the ones to suit your needs or industry. For instance, if you are selling medical equipment, this is totally different from chasing account receivables in the hospitality industry. Make sure that the agency is capable enough to deal with the number of claims you have.
With many trustworthy agencies out there, unfortunately, the industry has gained a bad reputation for the reason that some rely on unprofessional and illegal tactics to collect debt although there are strict laws regarding collection efforts – which any reputable debt collector will follow. As shady debt collectors will reflect poorly on your business, it is inevitable to select an agency with a fair and appropriate approach to collections. They should be stern as well as polite to achieve their collection goals and never have faced any ethical or legal issues when performing their functions.
Established agencies always have a licence to do their work. Even though their licence may not be mandatory in all states and territories, it is important you choose one that is authorized to collect a debt, is insured and maybe even accredited by the Institute of Mercantile Agents, the Australian Institute of Credit Management or ACA International.
Once you have located an agency that suits your needs, you will have to take a closer look at their billing policy to save yourself money and hassle. While some agencies charge a flat fee to save your business time and money, others take a percentage of the collected debts.