Collecting on outstanding debt is one of the most common problems that business owners face, and it is not an easy task. Debts can disrupt your cash flow, drain your time and sometimes drain your patience.
The simplest way to overcome the hassle of chasing debtors and preserving your time and resources is to hire a debt collection agency. You might have already thought about a debt collection agency, but something is stopping you from hiring one.
Here are the most common reasons stopping you from hiring a debt collection agency when required, and why you should engage one to make sure your debt is collected.
To Avoid A Negative Reputation
You have built your business on your reputation. Sometimes debt collection can get heated and very stressful, which then jeopardises your reputation with the customers. Making the switch from the customer is always right to the customer is now in the wrong takes some people outside their comfort zone, and it can be tricky to switch between such opposing personalities. You have provided the service in good faith, and now your customers do need to pay, no matter what.
Companies are so focused on winning business that losing a customer that doesn’t pay is counter-intuitive. Most businesses only make 5% to 10% profit after all costs. Filling the revenue space left by an unpaid job, invoice, or contract requires 10 to 20 times that amount of revenue to catch up. Not getting paid is very expensive. E.g., a $5k unpaid debt with 10% profit will require $50K to $100K in the register to cover that job.
Since debt collectors are always cool, calm and collected, it can actually lead to a better transaction with your customer, than if you choose to collect the debt yourself.
The relation between a business and its customers is about trust. Debtors make excuses and creditors believe them granting extra time for a bill that isn’t going to be paid until there are consequences.
Hoping that the debtors will someday clear their accounts might not be a good idea for your business. The debts will accumulate, and before you know, the debtor will reach a point at which they may be incapable of paying such as insolvency or bankruptcy leaving the creditor with no recourse.
Debt Collectors Are Too Expensive
Hiring debt collectors is not an expense, but an investment. Unpaid debts are an expense until it shows up as cash in your bank account. However, the cost of debt collection varies from agency to agency. Successful debt collection agencies will not charge any hidden fees.
eCollect – the best debt collection agency in Australia, is an agency that does not have any upfront costs. They work on a commission basis, and if they collect your debt for you, they take a percentage from the funds recovered. With the right trading terms, even this commission can be passed through to your debtor. IF you don’t have them when you start with eCollect, we will help you get them either as a gift because it helps us or you may want some specific terms and conditions customised to your business. If the latter, just ask us and we will guide you through.
You Don’t Want To Involve Any Legal Proceedings
Another aspect to consider when collecting debt is that some specific laws and guidelines need to be followed. When you take a DIY approach without proper knowledge, it may result in a hefty fine or even the loss of your right to collect the debt. There are two main reasons that are within the control of the creditor that eCollect encounter which is avoidable. The first is that during the inhouse recovery, it becomes a conflict instead of a recovery, and the other is that enforcement can be prohibitive, leading to each party calling each other’s bluff. Debt collectors aren’t really allowed to bluff. Instead, we act on the instructions of our client with approvals and disclosures at each milestone before progressing to the next.
And when creditors have to invest in a legal procedure, it can become a matter of principle and not an economic decision. Thanks to eCollect’s sister Law firm, we specialise in litigation for debt recovery exclusively. We don’t do wills, conveyancing or any other type of matter. Just debt recovery. As a result, the level of expertise is of a very high standard and equal to any challenge. eCollect and their associated law firm, EC Legal can smash that breakeven point because the time-consuming parts are done in house without incurring time costs.
The perception of debt collectors is usually skewed from reality. Debt recovery is a highly regulated/licensed industry for those who do it ethically.
However, it is essential to choose a reliable and reputable agency that can warranty integrity and transparency to clients. eCollect has been helping clients recover their debts for more than 20 years, and they use the latest technology during the collection process to make it faster and easier.
eCollect is ISO certified and have a Commercial Agent Licence (VIC, NSW, QLD & SA), Australian Financial Complaints Authority (AFCA) Australian Credit Licence and an Australian Financial Complaints Authority (AFCA). If you are searching for a reliable debt collection agency, contact eCollect and get the job done.