Working with a debt collection agency is one of the hallmarks of a respectable company that keeps its cash flow in check and cares where its money goes. In fact, debt collecting is one of the services that a modern and up-to-date business cannot be without. However, contacting an agency specialising in such services doesn’t always come naturally to business owners, who are misled by the many myths about debt collection. As you will find out below, legal debt collectors are professionals who can help you get back the money your clients owe you in a civilised and respectful manner and you have much to gain by collaborating with them.
Myth #1: Debt collectors have questionable methods
This has got to be one of the oldest and longest standing myths about debt collection and it undoubtedly appeared because, in the past, entrepreneurs would resort to all sorts of shady individuals to recover their debts. But today things are different. Debt collection is a respectable sector that employs the services of professionals and abides by strict codes of conduct. Contrary to what many people still believe, collectors have a polite and ethical approach. Their activity is regulated by legislation such as the Fair Debt Collection Practices Act (in the UK), which clearly states where and when collectors can contact debtors. According to this act, London debt collection agencies are not allowed to inconvenience debtors or treat them disrespectfully. They simply follow a series of formalities to recover the debt, sometimes they even develop a payment plan. You should not assume that debt collectors threaten debtors or reveal their debt to their family. The collector only talks to the debtor in full confidentiality, without bringing spouse or children into the game.
Myth #2: You have to go to court
Another long-standing myth about debt collection is that it often ends in court. While some cases do get to court, this only happens in rare and complicated circumstances. The mission of every professional collector is not to get to court and settle things as quickly and easily as possible. If it happens anyway, it means either that the company you chose to work with is not the best in the field or the situation of the debtor is very complex and needs legal intervention.
Myth #3: Debt collecting services are expensive
Why hire a company to go after bad payers when I can do this myself? It’s one of the questions business owners ask skeptically when dealing with debtors. After all, a specialized agency requires a huge fee. Well, that is also a myth. Debt collection services are not expensive at all. In fact, it has become common practice for agencies to charge their clients only after the debt is recovered. They operate on a “no win no fee” basis, meaning that if they don’t succeed in recovering your debt, you simply do not pay. So, you do not risk anything by working with an experienced and prestigious agency. As for the part of the myth saying that owners can manage bad payers on their own, this is simply wasted time that you should use doing much more important things.
Myth #4: Debt collectors only work with corporations
If you have a small start-up or if you are a freelancer you shouldn’t be stuck with pad payers. In fact, it’s all the riskier for a small company to have debts, because it doesn’t have as many funds and contingency plans as a large enterprise. Therefore, it’s actually advisable for small business owners to work with debt collectors. As explained previously, it’s not an expensive service and it can save you a lot of money in the long run. So, even if you haven’t been active in the field for a long time, you should get in touch with a debt collector to make sure your cash flow is not affected by slow or bad payers.
Myth #5: I should only call a debt collection agency as a last resort
Last, but not least, a harmful myth says that business owners should only contact a debt collector as a last resort when things have really got out of hand and the debt already seems impossible to recover. However, you shouldn’t wait for things to go this far until you take action. Collectors recommend clients to start the debt recovery process no later than 30 days after the due date. The more you wait, the harder it comes to recover your debt and your cash flow will have to suffer.