The debt collection industry is a vital part of the US economy. And for many businesses, it is a critical part of the overall accounts receivables process.
Many small businesses and larger organizations rely on the expertise and efforts of third-party collection agencies every day. And for good reason. Collection agencies are recovering substantial amounts of consumer debt and helping those businesses drastically improve much needed cash flow.
The economy is stronger because of collection agencies and businesses of all sizes continue to build a solid financial foundation by partnering with the right collection agency.
Want to know more about why businesses rely so much on professional debt collection agencies? Check out our thoughts here.
Experts in collecting debt
You might expect a collection agency to be experts in collecting debt and that’s true. But it goes far deeper than just picking up the phone and contacting consumers to ask them to pay. The best debt collection agencies incorporate ongoing and detailed training in all aspects of debt collections. That includes laws and regulations surrounding debt collections and regular training to build the necessary skills to navigate the collection process effectively. A critical part of training is also how to create resolutions through negotiations as well as the human element of building trust with consumers.
Collection agencies save a business time and resources
Pursuing customers who have not paid can be time-consuming as well as resource-intensive for a business. Businesses, especially small businesses, may not have the staffing or the internal resources to dedicate to collection activity. This is where a professional collection agency can become invaluable for a business that’s already stretched for resources. Outsourcing debt collections to a third-party agency can be one of the smartest investments a business can make.
Hiring a collection agency allows a business to focus on core activities
Outsourcing debt collections allows a business to focus more on core activities and operations. When a business outsources this part of its accounts receivables it frees up internal resources and then enables you to concentrate on those core functions such as growing your business, improving operations and customer experience.
Compliance with debt collections
A reputable agency will be well-versed in the legal aspects of collecting debt. Litigation can be costly for a business and that’s why many organizations outsource their debt collections to a third-party collection agency. This becomes particularly important when it comes to larger businesses with customers all around the country because debt collection laws can vary from state to state. And of course for a small business that could be relying on various office staff to follow up with late paying customers. If detailed training is not provided, legal issues could arise. Using a reputable debt collection agency affords you a level of protection you do not have on your own.
Professional and respectful communication with customers
Professionally trained debt collectors receive training to handle difficult conversations with consumers. They are also trained in how to use negotiation as a tool in working with the consumer. But it goes further than that. A reputable agency will ensure that the customers of a business are treated with the dignity and respect they deserve. Every consumer is going through a different type of financial challenge and the best agencies understand this, which is shown in how they communicate with a consumer.
Higher recovery rates
Organizations that rely on debt collection agencies often achieve higher success rates when it comes to recovering those debts, compared to internal collection efforts. The experience and strategies implemented by a professional collection agency can result in far more successful resolutions and dramatically improved results.
Debt collection technology
Organizations of all sizes use debt collection agencies because they do not possess the advanced technology used by established collection agencies. An effective collection agency will utilize advanced technologies and tools that can streamline the collection process and make it far more effective. This includes software for tracking a consumer ‘s debt, staying compliant with laws and regulations, access to credit history as well as advanced tools to communicate progress back to the business. Here at American Profit Recovery, we utilize our online portal APRweb, which provides businesses a complete overview of collection activity.
Preserving customer relationships
A small business or a larger organization that understands the value of partnering with a debt collection agency also understands that using the right collection agency can actually preserve existing customer relationships. By outsourcing debt collections, a business can avoid the potentially uncomfortable situation of directly involving staff and asking for past-due payments. Using a debt collection agency that understands diplomacy helps in preserving positive customer relationships, which a business has worked hard to foster.
Ready to improve your cash flow? Book a free consultation here!