Here are 7 Reasons to Hire a Collection Agency!
Almost everyone in business has encountered overdue accounts and/or slow pay. You are well aware it can have a huge negative impact on your business.
In fact, according to a U.S. Bank study, 82% of businesses fail due to cash flow issues.
So then the next question becomes: why wouldn’t you hire a debt collection agency?
Here are just a few of the many reasons why you should hire a reliable debt collection agency to manage your accounts receivables.
Why hire a debt collection agency?
Reason #1 | Legal Protection
Considering there a laws and different ones per state that govern what you can and cannot do in collection of bad debt. Debtors don’t hesitate to sue if they know a law has been broken.
Debt collection agencies are well-versed in these laws and rules for each individual state, as well as federal laws. Make sure the agency you choose to use is well versed in the state you are collecting in.
Hiring a collection agency will mitigate the legal risks involved in trying to collect the debt on your own.
Reason #2 | Efficiency
Legal costs are reduced by using a Collection agency. Agencies do this regularly with a system.
Agencies also have more advanced tools called skip tracing for collecting, and credit history analysis that can simplify and speed up the process, while increasing cash flow.
Additionally, a good collection agency has a track record of settling debt quickly.
Most but not all agencies operate on a contingency fee basis, meaning if they don’t collect, you don’t pay.
Reason #3 | Advice
You have the advantage of advice and consulting since collection agencies specialize in credit management.
This is a priceless advantage to hiring a collection agency.
Reason #4 | Increase Cash Flow
The biggest reason businesses fail is Cash flow or the lack thereof.
Collection agencies provide credit management services that can increase your cash flow and keep it under control. The sooner you turn the debt over to them the quicker your cash flow returns.
Reason #5 | Documentation
Collection agencies keep detailed records and documents on interactions with debtors. This is specifically required if you have to take legal action.
Additionally, if you claim the bad debt as a write-off, the agency will have the appropriate documentation.
Reason #6 | Skip Tracing
The best collection agencies use an advanced tactic called “skip tracing.”
Skip tracing is the process of locating a debtor who has “skipped” or left town, hence the name “skip tracing.” If a collection agency doesn’t have this software they are not the perfect choice for your collection needs.
This is especially helpful for cases in which the debtor hasn’t answered or returned repeated calls, emails and letters.
Reason #7 | Shifting Focus Back to What Matters
By allowing a collection agency manage debtors you can get back to what you are best at. This becomes a cost saving move.
The truth of the matter is that when you are selecting a collection agency, you get what you pay for. When an agency offers a low contingency fee, there is a reason. Anyone in business knows that there is a cost to doing business.
Make sure you do your homework and check out any agency you consider using. Check them out in the Better Business Bureau and find out their rating.
MCA is a third-party debt collection agency that has been in constant business since 1950. We are rated A+ with the Better Business Bureau and we pride ourselves on excellent customer service along with delivering great recovery rates. There is no cost to you unless we collect it! Why not try and re-coop some of your past due accounts with no out-of-pocket expense?