When a client or a party owes you money and is refusing to pay or is simply not responding to your invoices and demand letters, it’s time to call in a professional debt recovery service. However, if you have not hired a debt collection agency before, chances are that you will have multiple questions regarding the matter and we will try to answer the most important of those questions now.
When is it Time to Use a Debt Recovery Service?
As the lending party, going to a collection agency should not be the first thing that you do after the concerned party fails to make the necessary payment/payments. Make sure that the three preceding activities are checked first.
- Ensure that the client has already missed enough payments to raise a serious concern
- Try to communicate with the client multiple times and convince them to pay the bill (legal means only)
- Send a few demand letters, which will likely set a tone for negotiation
How Can They Really Help?
In the hands of a competent debt collection agency, the chances of successful collection is high as the collection sector is responsible for recovering billions of pounds every year. Their methods of recovery generally include phone calls, letters, emails, and residential visits, but when these methods fail, direct legal actions are brought into play by the agency.
It is important to note that you should only hire an agency for debt collection if they do not have a bad reputation for using illegal methods of recovery such as threatening behaviour and harassment. A collection agency that uses illegal methods of collection will taint your own reputation and might even make you the target for a legal action.
How Should You Choose One?
There is no shortage of agencies out there that are willing to collect for you, but before you make your choice, be sure to check the following facts first.
Certification and License – Getting certified for debt collection is quite a long and strict process, so verify that the agency you are about to hire has that certificate and licence to practice. Don’t just take their word for it; do your own background check.
Specialisation – A credit card debt isn’t the same as a business debt and there are a lot of other variations as well. This is why you should check to see if the agency has a successful history in recovering the type of debt that you need them to.
Methods – As mentioned earlier, if the debt recovery service you hired ends up using illegal tactics to get the money, you could be subject to both bad reputation and lawsuits. In addition to that, discuss their collection strategy in details to see if you find any of their methods unacceptable. In any case, it is ideal if they keep you informed about everything that they do to get your money, but you can choose not to know the details if that suits your purpose.
No lender really wants to go to a collection agency if they can help it, but if you don’t have any other option left, it’s best to lose a bit of the money as fees for the service than to lose the entire amount that’s rightfully yours.