We all know that collecting bad debts is one of the most stressful aspects of managing business finances. However, some companies are still reluctant to use a debt collection company. In question? The many preconceived ideas conveyed by press articles and the Internet which give them a negative image. They are thought to be harsh, cold, aggressive, not very empathetic.
Many corporate executives and finance managers worry that their clients will be harassed by a collection agency, whether it will harm their business relationships or cause legal problems. And, for the debtor, it can be frustrating if they think the debt is not due or they are being treated unfairly.
Let's analyze together 6 prejudices about debt collection.
1. Collection agencies would be rude and aggressive
This is one of the most common misconceptions heard by business leaders and consumers. Yet the best debt collection agencies understand this problem and take it into account. They are courteous and professional and collect outstanding payments without harming the relationship between the client and his debtor. Their job is to make sure that both parties are happy and that their relationship continues after the debts are paid.
Many people face payment issues due to unexpected expenses or other financial challenges, such as job loss or health issues. The collection agency seeks the best outcome for both parties involved. She will therefore do her best to find an amicable solution for each situation.
Collection agencies will therefore not add any stress to your life, quite the contrary. They will help you resolve the situation as quickly and efficiently as possible.
2. Debt collection agencies would be expensive
Another common misconception about debt collection agencies is that they are expensive. In reality, this is far from the case. Most debt collection agencies only receive a percentage of the amount recovered, with their intervention usually covered by the amount recovered. They can save you money by supporting chargeback tracking, including sending letters to debtors and notifying them of the consequences of non-payment, sending payment plans, and collecting payments.
3. Debt collection agencies would be reserved for large companies
Collection agencies also work with VSEs and SMEs. Don't be afraid to ask questions about how they will approach your case and what they can do for your particular company. The key is to find a company that understands your situation and will work with you to develop solutions based on your needs.
4. Collection agencies could not be used for recent debts
Many people believe that debt collection agencies cannot be used for recent debts. This is simply not true! In fact, it is better to hire a debt collection agency as soon as possible. Indeed, the sooner you take this step, the more likely you will be to receive your money, and this at a lower cost to you.
In addition, each invoice has a limitation period. This means that once the invoice has been sent, you have a certain period of time before your client can mention the prescription. This time frame varies by industry and country. Check with a collection agency to find out the limitation periods for your invoices and react as quickly as possible!
5. Collection agencies would damage the reputation of companies
Many creditors don't use collection agencies because they think it could hurt their image. On the contrary ! Working with a collection company sends a serious signal to your clients. You have done a job or sold a good and you deserve to be paid. In addition, collection companies are required to comply with sector-specific laws and a certain code of ethics. They act in a professional and courteous manner with your customers/debtors.
6. International debt collection would be impossible
Although collecting international debt can be difficult, it is not impossible. However, this requires more resources and knowledge. You have to deal with a different language, culture or legal system than yours. Some collection companies have teams in different countries who have the knowledge and experience to collect your debt internationally.
To conclude, debt collection companies are there above all to help you. Entrusting them with the management of your outstanding payments is efficient and profitable. They help you improve your cash flow while respecting your customers. It is quite possible to find a reputable debt collection agency who has solid experience in the management of unpaid debts in your sector of activity.