The Benefits and Risks of Using a Debt Collection Agency

8 10 2010

In a time of economic hardship, many companies have accounts out on the streets uncollected.  More and more businesses and individuals are unable to pay their debts due to the recession.  This may lead to businesses that are owed money to not be able to pay their own bills, employees, and even shut down. Many companies resort to using a Revenue Recovery Agency because they believe the benefits outweigh the risks.

Some companies that have uncollected invoices are wary of using a Debt Collection agency because it may sever the relationship with their customer.  A few collection organizations and individual agents use practices and tactics to receive debts that many debtors consider harassment, which tarnishes the reputation of recovery agencies.  A business considering the use of an agency may be nervous that valued customers will no longer do business with them if that customer is contacted by an agency. In reality if you view the collection agency as your extended partner, they can actually save your customer by taking you out of the mix and working on both parties behalves for a positve result.

Another downfall to using an agency is that it does cost money.  Few agencies charge a fee, whether debt is collected or not, especially when the amount is small.  However, most companies work on a contingency basis,  meaning they do not get paid unless they collect. Butler Robbins & White is one of these companies.  Although a business that hires a collection agency that works on a contingency basis does lose a percentage of the debt collected, delinquent invoices are more likely to be recovered if an agency is used than if the company tries to collect invoices on their own.

When using a contingency agency such as Butler Robbins & White, it only costs money if the debt is recovered, which is only one of several benefits.  For instance, Revenue Recovery agencies are governed by the Federal Trade Commission (FTC), which enforces the Fair Debt Collection Practices Act (FDCPA).  Collection businesses are not allowed to harass debtors or make false statements.

If a company hires an agency to collect debt, then the company can focus on its core business and what it does best instead of wasting time trying to collect on their own.  Recovery companies are experienced and know how to handle collections.  They know legally what they are and are not allowed to do in order to recover unpaid balances. This protects your company from being sued for unfair collection practices.

Finally, using a collection agency protects your brand image because you are not the person calling to collect money. It shows that you respect your customer and can even build rapport especially since agencies can establish payment plans if the debtor is unable to pay the balance at once.

As you can see, there are far more benefits than risks when deciding whether to hire a debt collection agency, collect yourself, or chose not to receive your payments at all.  Leave collection to the professionals for the security and comfort of your company.

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