As business owners, we all have experience dealing with customers who are slow payers or outright refuse to pay their debts. As we all know, this can be detrimental to the business' finances because it can significantly impact its cash flow, especially when it's starting to stack up. Not only that, even though we are willing to collect debts, collecting debt from even just a single customer can be very time-consuming.
The older a debt becomes, the harder it will be to collect, especially in legal terms. If your payment demands are unsuccessful or you find it hard to deal with, hiring a third-party collection agency might be the thing for you. The debt collecting industry is thriving nowadays because of the excellent image of business owners.
They are there to help us collect debts, but they also help us in a legal situation where debt collecting can go up to court. Therefore, hiring a debt collection agency is an easy way for you to focus on more important things in your business than dealing with the stress of debt collection. But with that in mind, what exactly are the reasons you should hire a debt collection agency?
Successful Debt Recovery
Debt collection agencies have a lot of experience collecting delinquent debts since it's their goal. With this experience, you can safely assume that they mostly have an almost 100% success rate in collecting debt from your customers.
Your primary focus should be making sure that your business is working correctly and not dealing with the stress of debt collecting which can take a lot of time and resources, which is the debt collection agency's goal. These agencies have trained professionals who can deal with customers who refuse to pay by employing techniques that can legally coerce them to pay your business back.
Legal Protection
Nowadays, there are a lot of laws regarding the debt collection industry. This also means that many well-informed customers will waste no time suing businesses who think wrong regarding debt collecting. Debt collection agencies know these, so they are well-versed in laws regarding this industry.
However, these are complicated matters and will take you a lot of time to study, which is why by hiring a debt collection agency, you can rest assured that your business is protected legally. Allowing a debt collection agency to handle these matters for you eliminates the legal risks involved when collecting delinquent debts from your customers.
Documentation
Debt collecting is complicated because of the risk of being involved in a legal scuffle. One of the things that can save you a lot of time in court is presenting evidence that can give you an upper hand. That said, commercial debt collection agencies always have documentation of all the interactions between you and your customers. Also, this documentation demonstrates to the court that you have put forth an extensive effort in getting back the debt.
Additionally, if you claim the bad debt as a tax deduction, you need to have the documentation for the tax files. In an audit, the IRS would want to confirm that you have exhausted all of your options before writing off the debt and claiming it as a deduction.
The Process is Much Faster
When you hire a debt collection agency, people tend to pay faster and more often. How? Debt collection agencies have methods that make it easier for your customers to pay you back. This process is fast so that you can get your money sooner. Also, this service can go along with your billing process, so you don't have to adjust to the agency's methods. In short, with a debt collection agency, you will be assured that you will get your money back as fast as possible.
Flexibility
Each business has its financing methods. That said, debt collection agencies have different programs to help with their clients' business models. Suppose your business model is not too complicated. In that case, the chances are that the debt collection agency has a program that can work with your finances and probably even make it faster and much more efficient.
Some debt collection agencies have a flat fee for their services, while some have a commission-based system where they receive a small amount of money for every debt they collect. These are their primary methods, but they also have other ones and can also make the adjustment themselves to work with your business model. Whatever it is, they can make it work according to your business' financing practices.
Final Words
Hiring a debt collection agency should be on your priority list if you're having trouble getting back payments from your customers. Debt collection is complicated, especially on legal terms, which a debt collection agency specializes in. If you want to focus more on your business rather than dealing with the stress of debt collecting, then hire a debt collection agency.
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