subject: 5 Common Mistakes When Choosing A Debt Collecting Agency [print this page] For a corporation, business or sole trader, there is nothing more frustrating than the customer who just won't pay. At these times appointing an agency might be your best resort, not only for chasing bad debt but improving the overall debt collection processes. Before deciding on the best debt collecting agency for your business, it makes sense to be aware of the pitfalls of selecting the wrong one.
Avoid these five common mistakes to help ensure the agency you've engaged will work with you to recovering money for old debts.
1. Assuming the agency is registered or licensed
It should never be assumed the agency you are dealing is appropriately licensed. A reputable collections agency will always hold an appropriate licence.
Further, dealing with an appropriately licensed and compliant collection agency ensures that the agency is operating in accordance with all applicable guidelines and in accordance with the law.. This will mean peace of mind for you as they represent your business and effectively, your brand name is protected.
2. Expecting full payment of the delinquent account
There might be a number of reasons why the delinquent account will not be paid in full and there may be some debts that cannot be recovered at all. Collection rates can vary depending various factors such as the age of the debt, debtor disposition or even period of referral.
Rest assured that collection agencies are experts at debt recovery and will give you the greatest chance of recovery.
3. Not checking the fees involved
Debt collecting agencies fees can vary so it is important to know and understand how the fees are structured. Find out if there is a 'one off' fee or if fees are calculated on a contingency basis (ie 'no collection no fee' whereby fees are calculated on a percentage of the amount of the debt recovered. Ensure there are no hidden costs or joining fees before committing to any agency.
4. Cheapest is not always the best agency for your dealings
Consider the services provided by the debt collectors as well as the costs. While you may be tempted to go with the cheaper agency, this in itself does not provide any guarantee that the debt will be recovered. You should be careful of this. It is better to know you are dealing with a firm who achieves results. What is the point of having the lowest fees if you never see results?
5. Signing an agreement without reading through the fine print
As with any business dealings, you should always carefully read the terms and conditions. Before engaging an agency to collect debt on your behalf, research all your options and ask questions so you have as much information as possible. Verify the agency is licensed and check their fee structure. Always read any terms and conditions in its entirety. By following these directives you are protecting yourself from disappointment after signing an agreement.
