Possibly the most difficult thing about running a business is the process of extracting money that is owed by customers. As in any situation where money is owed, whether a loan that is due or accounts that haven’t been paid, it’s an awkward business for any individual attempting to collect what is due to them. It is both time-consuming and embarrassing to keep chasing people, not to mention a legal minefield for those unfamiliar with the process. Thus the sensible route is to hire a professional debt collection agency to assist with recovery of the money. The benefits are very clear:
Protecting yourself legally
If you should overstep any of the many laws that govern debt collection, you could find yourself in worse hot water than just being owed money. And the debtor may know a considerable amount more than you about their rights. An agency will know how to deal with recalcitrant but well-informed customers. They are well-versed in these laws and know how to handle the case both legally and effectively. Deploying an agency with experienced experts to recover unpaid debts on your behalf eliminates the legal risks involved with attempting to collect debts on your own, and protects your business.
Applying the techniques of success
Because debt collection agencies have good knowledge and experience in collecting unpaid debts (it’s their business after all), your chances of getting your money are more favourable than applying you own efforts. A trained professional knows the best techniques to legally coerce debtors to pay. Not only that, but their authority exceeds yours, and a debtor faced with a professional agency in the mix is unlikely to let the dispute go to court or have their credit record significantly damaged. An agency is also able to create flexibility with regard to repayment, which is another persuasive factor that the debtor can benefit from, while assuring you of ultimate payment.
Keeping proper records
An agency will keep meticulous records of every contact with the debtor. This is important if in the future, you need to sue the debtor. In this scenario, you will need to present a record of every time you have contacted or attempted to contact the debtor. This is something a debt collection agency is likely to do more efficiently than you because they know exactly what is required for the courts. In addition, should you wish to eventually claim this debt as a deduction on your taxes, you will need to prove you exhausted every option before writing it off.
Using a third party to recover debts strengthens your position, and generally has a motivating impact on the debtor. At this point you are really taken seriously! There’s no doubt that when you hire a debt collection agency, people pay you faster and more often. Agencies can provide services that speed up payment through your existing billing process, which means you will spend less time on chasing money owed and more time on your business.
Bringing sensitivity to the process
This is exactly what an agency can do. They will negotiate with the debtor fairly, determining any reasons for non-repayment, and how these issues can be resolved to everyone’s advantage. This reasonable but firm approach can be beneficial to your brand and reputation. Keeping a good relationship with the debtor, both through the collection procedure and staff interaction, is important because he or she may continue to be a good customer once the matter is amicably resolved.
Benefiting from a payment system that works with you and your business
On target debt collection agencies will only charge you once monies have been recovered. Tailor-made debt recovery solutions are designed to fit your business requirements. This includes ensuring that you only pay for what is recovered. This helps your business remain on track and keeps business goals aligned.
Accessing customised software solutions
While you may have latest accounting packages, these are not specifically designed for keeping records of debtors. A reputable debt collection partner will offer customised software solutions that will enable access to individual and company records to ensure the most optimal debt collection procedures are undertaken for each individual case. Traceps is a leading online Debtor Tracing and Investigating tool in South Africa.
- Setting up your own internal collection system can be expensive. You need to hire and train specialist people and this will take time and there’s no guarantee it will be cost-effective or efficient.
- Debt Collectors have wide experience in the marketplace. They may hold useful background information with regard to debtors who prove difficult to deal with.
- Time is of the essence – because the longer you leave the debt unpaid, the less likely it is to be paid. To appoint the right agency sooner rather than later is crucial.
- Cash flow is important in ensuring your operations continue efficiently – and collecting debt is an integral factor, certainly as essential as invoice and revenue management.
- Agencies ensure the best returns. They are aware of all tactics used to avoid paying debts, and are therefore well-equipped to handle each situation. They are also attuned to any legal implications and pressures the debtor may be under. This aspect is important to helping the debtor to pay the money owed.
LegalTrack – how we do things differently
At LegalTrack we work with real people with real problems and therefore we apply a highly considerate and respectful approach to debt collecting. We understand that we need to be firm, but we are also aware that to negotiate successfully with an individual who is already in a difficult financial position, we need the skilful combination of empathy and experience, backed by well-honed communication capabilities. Our modus operandi is simple, direct, efficient:
- Our first contact is via an SMS.
- This is followed by a phone call to begin the negotiations on how the debt will be paid.
- All payment arrangements/negotiations are confirmed via letters, emails and text messages.
- Our promise is to constantly keep contact with our debtors in terms of all arrangements.
- Any legal action is considered the last option.