Kim Turner • May 30th, 2014
Initially published by: Kevin R. Wright
It could be argued that an internal credit control department provides the same service as a debt collection agency. However, a debt collection agency can often provide better results whilst being more cost effective. The effect of a third party debt recovery agency becoming involved should also not be underestimated. Often, a simple demand for payment from a third party agency can be the prompt a debtor requires to settle an unpaid account.
A debt collection agency can also provide additional services to the core business of debt recovery. For instance, a collection agency may also provide legal services, enquiry agents, process serving, company searches, credit reports & company formations in addition to debt collection services. An agency providing all of these services can therefore be a “one stop shop” for all your credit control requirements.
A debt recovery agency may also have its own in house legal department employing solicitors & legal clerks. Such firms provide a real alternative to the traditional option of employing a solicitor & often at a fraction of the cost. A debt recovery agency with an in house legal department often provides a much more professional service than a firm of solicitors, who may not be specialists in the debt recovery arena.
Debt collection agents often have a less than desirable image. However, in recent years much has been done to regulate the industry to ensure that an efficient & ethical service is provided at a reasonable price. Ensure that any debt recovery agency you consider engaging is regulated by the relevant governing bodies & holds the appropriate licences & accreditations.
When considering engaging a third party agency also make sure that you understand the fees & pricing structure. Avoid any collection agency that requires payment upfront or requires you to purchase credits or join any form of membership scheme. A reputable collection agency will have a clear & concise fee structure which will usually be a set commission on any monies recovered.
In the UK the Credit Services Association (CSA) provides a list of member agencies which have agreed to abide by the CSA code of practice, which is the benchmark for best practice in the debt collection industry. You would therefore be well advised to seek advice from the CSA when considering engaging a debt collection agency to act on your behalf.
Choosing the right debt collection agency will assist to reduce your credit control costs, will reduce your debtor days & therefore make your business more profitable whilst at the same time leaving you with more time to run your business.
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