How Do I Use A Debt Collection Agency?

How Do I Use A Debt Collection Agency?

There are a few things to keep in mind when you are looking to work with a debt collection agency. In our previous blog we have discussed the information you should have at hand to get your invoices paid faster but there are other factors to take into account when you are looking at taking a debt to a collection agency:

How Old Is The Invoice?

If you have an outstanding invoice, there is the question about when it changes from overdue invoice to an outstanding debt. If it moves past 60 days you have definitely moved into the debt category. The longer the debt sits, the lower the chance that you get your money back. Before you panic though, as soon as the invoice becomes overdue make sure you contact your customer, they may have just missed the date or their card may have expired. Before you change the overdue invoice into an outstanding debt, give your customer the benefit of the doubt. But also remember that once you reach that 60 day mark you definitely need to take further action.

How Much Is The Debt Worth?

No matter the amount, you can hire a debt collection agency, though we advise that the amount be at least $50.00. Hiring an agency can be an effective method of getting those amount paid, especially if you contract the agency with your business overall rather than a specific debt.

What Are You Entitled To Get Back?

You are entitled to the outstanding funds that the debtor owes you. By working with a debt collection agency who can provide you with debt legal advice, you are letting the debtor know that the situation has escalated and that they can no longer delay payment. It is basically drawing a line in the sand to let your debtor know they have to pay. It is important to note though, that your collection agency will likely take a commission based on the amount due.

How Long Does Debt Collection Take?

Debt collection is not going to be resolved within a set date. The way a debtor responds to a debt collector can affect the timeframe for a return of your money. The first step is a letter of demand which often leads to a quick resolution, sometimes even within 7-14 days, of the issue with the debtor. However the debtor may be unresponsive or a payment plan may be negotiated. Furthermore, the debtor may be hard to serve as they may not be at their listed address or may be actively threatening. If this is the case, rather than 7-14 days, you could be looking at a few months to resolve the debt unless field services or skip tracing services are engaged. This is why it is important to provide all relevant information to the debt collection agency.

What Are The Benefits?

There are many benefits to working with a debt collection agency to resolve outstanding debts. Cash flow is important, no matter your business size and the recovery of debt for work completed is vital. Collecting a debt can tarnish the relationship between your business and your client and having a debt collection agency as a third-party can mitigate this fallout. This provides a clear legal framework for both your business and your customer when it comes to paying the debt.

Furthermore, your debt collection agency can help to draft T&Cs of repayment and create a solid foundation for dealing with future debts. Having a debt collector as a mediator between your business and your customer can help to maintain your relationship even when debt occurs.

Want to Start Getting Your Debt Collected? Contact Dynamic Commercial Collections!

At Dynamic Collections we understand the burden that unpaid debts can cause. With over a decade of assisting individuals and businesses with their debt recovery we understand the urgency of recovering your debt without harming your customer relations. To begin the debt recovery process for your business, contact us today.

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