Third-party debt collectors agencies that are in charge of collection and other types of outsourcing services are increasing a notable increase in popularity these days. And with the rise of more modern technology that makes it easier and simpler for them to track down delinquent debtors, it wouldn’t be a surprise if the industry blows up into a more lucrative field.
If their debt collectors don’t put in the extra efforts, it would all be too easy for businesses to just bid their money goodbye.
But, while there are many advantages associated with working with third-party collection agencies, there are also some disadvantages that you have to know about.
To help you decide whether your business should work with debt collectors or not, read on to know the pros and cons of hiring one.
Pros of Hiring Debt Collectors
They let you free up both your time and resources.
Business owners find it too expensive and time-consuming to collect debt by themselves. This is especially so for local and small businesses that would rather focus on other core areas of their business instead of chasing after stubborn debtors.
They have the right tools to perform the job.
Collection agencies use the right set of equipment and tools that let them track down customers and collect their payments. They use the most state of the art technology to communicate to these debtors and track down those whose whereabouts might be unknown to you.
They will handle the collection when you can’t.
Your collection efforts may fall on deaf ears and your delinquent debtors may not give you any response at all. But, if you let the professional debt collection agencies do the job, you will be amazed at how the bills are paid well and on-time. Your business may originally start collecting debt during the first month but the moment a debtor becomes delinquent, it wouldn’t hurt to get the help of an expert.
Cons of Hiring Debt Collectors
You may be charged with a pricey service fee.
You need to spend some cash if you need the help of professionals in getting payments for delinquent accounts. Most collection agencies charge their clients with a percentage of the overall collection or a contingency fee. But, more than this charged fee, one of your important considerations is the return of investment in the form of the debts collected.
Your customer relationships might get affected.
This can be true since many debt collectors don’t really have the necessary communication skills. This can then lead to an ill relationship between your business and your customers. Your client may have a not so good financial situation right now but it doesn’t mean they won’t pay you back. Things often go out of hand if debt collectors show some rude manners.
Debt collectors may jeopardize your business.
Government agencies don’t govern collections for the business accounts and the laws that dictate how debt collection agencies should collect from customers. It means that there is always the risk that things might go beyond the law at some point.