No matter how diligent you are about pre-qualifying credit customers or collecting deposits, you will always have customers who don’t pay their invoices. As your business grows and scales, outstanding debt often increases faster. At a certain point, these past due invoices reach a critical mass and you may find yourself considering options to outsource your past due collections.
Most business leaders and accounting department heads have little familiarity with collection agencies. Some may have an idea of how collection agencies operate based on pop culture references alone. When this happens, there is often hesitation to hire a professional collection agency. Unfortunately, there are misconceptions about collection agencies that can cause unnecessary worry for your organization. Here are just a few we can put to rest.
False: Collection agencies are dishonest
There seems to be a misconception that collection agencies are somehow less legitimate than other financial businesses. Often, people associate words like “shady”, or dishonest with collection agencies. However, nothing could be further from the truth. Collection agents are held to a strict standard of regulations and processes that ensure that we follow the law. Most agencies have internal legal teams that help hold the company accountable for operating within legal guidelines. Additionally, on principle alone, one could argue that collection agencies are exceptionally honest. Our entire business model is devoted to keeping customers honest by honoring their commitments to pay their outstanding debts.
False: Collection agents are unkind
Collection agencies also have an unfortunate reputation for being mean, rude, and pushy. This is a slightly more difficult claim to refute because it is so subjective. Also, different agencies have different communication styles and strategies to collect. We can’t speak for the industry as a whole. However, we can speak for ourselves at Southwest Recovery Services.
Our philosophy is that a little bit of kindness can go a long way. We consider ourselves an extension of our clients’ customer service team. Therefore, we treat their customers with the same respect that they would expect to receive from our client. We know that many accounts go to collections due to misunderstandings and temporary financial difficulties, so it’s very likely that these customers could return to our client for future business. Therefore, we would not put that returning business at risk by treating people with debts disrespectfully.
At Southwest Recovery, we still use all the tools at our disposal to collect debts. We send multiple notices, follow up frequently, and use credit reporting and other legal avenues to collect. We just don’t resort to unkindness. It’s both unethical and ineffective.
False: Collection agencies are expensive
Even in mid-to large scale operations, the temptation to handle collections internally is strong. This is, in part, because of the misconception that it’s too expensive to send accounts to collections. While it is true that collectors charge a fee, either by buying the accounts at a reduced rate or charging a contingency fee, that is not the only cost to consider. Collecting in-house may require you to hire more people, pay overtime hours, pay for additional training, and overall cost you productivity. That should absolutely be considered when weighing the cost of using a collection agency. We also recommend that you work with a company like Southwest Recovery Services that charges a contingency fee rather than “buying out” the debt. That way, you only pay a fee when we collect the debt.
Outstanding Debt Needs and Outstanding Solution
Southwest Recovery Services is here to be a partner to your company. Unlike some collectors who take your files and run, we work with you to collect debts from your customers while keeping your reputation and integrity intact. Give us a call today to learn more about how we can help you get paid faster.