The debt collection agencies can help the business owners to collect the due amount from their customers. These agencies help in securing the payments from non-paying or late-paying customers. The business owners who are struggling will delay in payments even after trying so many techniques then they should consider hiring a collection agency. You should keep track of payments by investing in accounts receivable tools. This software will help you to determine the defaulter customers and the right time to hire the collection agencies.
Another name of collection agencies is a debt collector. The debt collectors contact the non-paying customer through phone calls, letters, and emails. These agencies use a special type of resource for collecting due payments from non-paying customers.
Sometimes, it is difficult to contact customers through phone calls or letters because they have changed their contact numbers and addresses. The collection agencies can easily find the new contact details by using their skip tracing services. The collection agencies have a unique database that helps to track down these customers.
When you hire a collection agency expert, you do not need to make any payment unless the due amount is received. But, it is recommended that you should ask about the pricing structure of the company in advance so that there will be no disputes later on. Usually, the collection agencies charge a few percent of the debt collected. The rates of charging are usually varying from 15% to 33%.
Right Time To Hire Debt Collectors
All businesses are unique and there would be different times to hire debt collection agencies or debt collectors. But, some signs indicate it is time to hire the collection agencies. For instance, the aging of accounts receivables is one of the biggest indicators that it is time to hire collection agencies. You should check the aging of invoices and if they are aged more than 90 days, you should hire a collection agency to collect the payment. Along with the aging of invoices, various other factors indicate it is time to hire the account receivables. Some of them are described below:
Bad Cash Flow In The Business
Late payment can lead to slow cash flow in the business and it can affect the entire operating system of your company. The account receivable collection agency helps to collect the due amount as soon as possible and restore the cash flow in your business. By hiring a collection agency, you can get paid at a faster rate. The accounts payable and receivable software can also help in maintaining the good cash flow in your business.
Delay In Payments
Another indicator for hiring the collection agency is unanswered phone calls by your customers. In addition to this, if the business owners are getting lengthy excuses for not making payments, avoiding your follow-up emails, and broken promises, then it is time to hire a collection agency.
Customer Wants To Pay, But Can’t
Sometimes, the customer wants to pay but is unable to pay because of financial issues. But, allowing these customers to delay their payment is not good for the growth of your business. You should collect receivables to keep your business persistent. But, at the same time, you do not want to ruin your relationship with your customers. The debt collection agencies will act as the neutral party and help to collect the payments without affecting your relationship with these customers. You should keep track of delays in payments by investing in the right accounts receivable process.
The collection agencies or debt collectors are quite helpful in collecting receivables. But, hiring a collection agency should be your last step. You should try to collect the receivables on your own by using the accounts receivable management software. If you choose this method, then you do not need to share your profit with the collection agency. This technique will help you to collect the receivables and maintain the optimum cash flow in your business. If you want to get paid at a faster rate, you should communicate the payment terms and conditions with your customers. Also, you should automate the invoicing process by investing in the accounts receivable collection tools. These kinds of tools will help to streamline the cash flow in your business and help to earn good profit in your business.
Important Factors To Look In Collection Agency
When it is time to hire a collection agency, you have to consider various important factors. It is recommended that you should check the license of the account receivable collection agency. The different states have different rules for licensing. If collection agencies take aggressive steps for collecting payment, then you will be sued for hiring a non-insured agency.
The collection agency will help to collect the due amount from non-paying customers. But, it should be the last step. Sometimes, collecting payment through collection agencies will disappoint the customers and affect your relationship with them.