Normally, people are ethically driven enough to be able to pay their debts to the company they have made a purchase from. Most customers follow this simple code of conduct and things work out for the better. However, it is the exceptions that prove the rule, and the exceptions can make life a bit hard for everyone involved in the business. The same is the case with long-overdue invoices or bills for services rendered in the past or for goods purchased many months back. For such tough customers, some tough measures are warranted and hiring a debt collection agency can prove to be one of the more ideal measures for such delinquent clients.
Usually, if a customer hasn’t paid their debts, there are two routes a business can take. Either they cut their losses and do not pursue business with that customer, or they can hire a collection agency to receive what is owed to them. Opting for the latter sends a strong message that business who get the products or services as expected need to pay up for the same. Failure to do so might result in getting the debt collection agencies to knock on the clients’ door.
Why Businesses Hesitate to Hire a Collection Agency
There are a couple of reasons why a business might not want to hire a collection agency. A lot of times a business needs to maintain its reputation, or are worried about the cost of hiring a collection agency. These worries are unfounded since the debt agency only takes a part of what the customer owes the business, and customers normally respect an agency that can take initiative for debt collection, leaving their reputation intact. Any working person knows how hard people work to earn money.
That being said, here is how to know when you need to resort to hiring a collection agency.
- Missing Customer
If a customer has done a good job at ghosting the company, leaving no mode of contact and have seemingly disappeared completely, debt collection agencies do a better job at finding non-paying customers. They have the necessary tools to track them down. So the next time you find yourself grappling with a non-paying customer who has simply vanished, you can trust the friendly collection agency guys to track it down and obtain the pending amount to improve your cash flow situation.
- Due Date
If the customer goes 90 days past the due date of payment, you might need a collection agency to find out why the customer has not paid. If you try to get the debt paid 90 days past the collection date, there is a low chance of success, but a collection agency has better chances of getting your money back. This way, they become effective even in situations where there is no hope of receiving any sum of money from erring clients.
- Bouncing Checks
If the customer keeps sending checks that bounce, they might not actually want to pay at all. A collection agency is a must at this point since they can impose the pressure needed to get the customer to pay. This appears to be the only way to make them understand the criticality of receiving the outstanding amount.
- Avoiding Calls
If the customer keeps postponing meetings, or doesn’t pick up the calls, or makes excuses like ‘i’m busy right now’, then they are avoiding payment. Here is when you use a collection agency to find a channel of communication that can get them to pay.
A customer that keeps making promises and increasing the deadline is essentially making it so that the older the debt, the harder it is to collect it. Amongst the various business ventures, you can hire a collection agency to avoid such issues of stalling.
A debt collection takes upon itself to get the outstanding amount cleared if all other measures to extract the amount has failed. People may usually opt for a debt collection agency as a last resort when they have exhausted all means of obtaining the amount towards long overdue invoices. And they have seen that collection agencies can prove to be tremendously useful in extracting full or partial payment from the erring clients.
There is no shame in hiring a collection agency, and though it might seem like an extreme measure, ultimately it is beneficial for your business. After all, everyone works hard to earn money and you should not have to lose out on the time and effort you have put in. Even companies with good standing need tough measures implemented against frequently defaulting clients. It is exactly in such situations that a debt collection agency comes in handy. Such a company would be the best to elevate the likelihood of receiving valuable amount kept as outstanding by the problematic client.