Are you having problems collecting debt from customers? You may avail of the services of debt collection agencies to help you recover the money owed to you.
Commercial debt collection agencies are organizations that take charge of dealing with customers with pending amounts to be paid as part of their subscription to particular services or products. Not all businesses have their own collection department, and oftentimes, if the company is a start-up or a small one, the tendency is to outsource the services to a collection agency.
What Debt Collection Agencies Do
The primary goal of collection agencies is debt recovery which means that they should be able to encourage the subscriber to settle his unpaid bills in a fair and timely manner. These organizations are directly linked to legal matters which why they are composed of collection lawyers. These attorneys have their own pool of staff that manages the documentation as well as follow ups, and communication with the subscribers concerned.
The Debt Collection Process
The process of debt collection begins with contacting the subscriber through phone calls or emails regarding his outstanding balance with the company from which he availed the service. Usually, phone calls are more efficient as this gives the collector a greater opportunity to talk to the client and sort things out while giving them options on how they can pay off the debt. In case the provided contact number is no longer active, the second option would be to send the client notification letters coming from the collection agency stating their balances and date of payment. The letter should also state where and how the client can negotiate for his debts. This time, the negotiation will take place between the debtor and the collector and not between the client and the service provider.
Setting up a debt collection agency is a smart move because it can be profitable especially since many businesses are opting to outsource their debt collections people. But consider the liability that this can bring you. First, it is of the utmost importance that you hire the most skillful attorneys when it comes to debt collection and negotiation. Second, not all clients will pay their outstanding balances especially if the country where you operate does not prosecute debtors and have excellent consumer protection laws. In this case, you will not bring profit to your agency if you will not be able to collect the debts from concerned individuals.
If you are wondering how debt collection agencies make their profit, it depends on their negotiation with the service provider. Here, the goal of the service provider is to collect at least a certain percentage of the total amount due from a subscriber. Oftentimes, this includes operational and manpower expenses. Now, the job of the collections agency is to collect that amount from the subscriber and anything in excess of that may be negotiated to the service provider as form of their payment.
Thus, the work of a debt collections agency depends on the outcome. If there are results to their petitions, then they will have their commissions and profits. This is basically why most debt collectors are so aggressive in dealing with the customers that it can sometimes lead to harassment.