Misconceptions are everywhere in modern society, perpetrated by numerous media outlets from tabloid newspaper hype to televised stereotypes. Never is this more the case than with debt collectors. The phrase alone typically conjures up images of burly men in bomber-jackets knocking at your door with a demand for money.
In the same way that the ‘taxman’ is thought of as an inhuman entity soul-bent on taking all your money and leaving you in the street, debt collection agencies have been tarred with the same brush when nothing could be further than the truth and there’s more to debt collection than chasing non-payments.
For businesses, having a debt collection agency on-side has many advantages outside of collecting money owed. While the public misconception may have created a negative image of the industry, from a business point of view the debt collection agency is your friend.
When businesses themselves need money, it helps to have a relationship with a debt collector. Chances of attracting bank lending are increased when you can demonstrate management of your receivables as it gives banks confidence that repayments will be met.
It isn’t only when customers fail to pay that companies use debt collection agencies, it can often be when the company themselves are unable to accept payment. While data is usually backed-up and stored off-site, emergencies such as fire can mean that credit staff are no longer able to access systems and nobody is able to chase payments, on-time or delayed.
Companies will often use a debt collection agency to act as collection agents, ensuring that cash flows remain positive when it’s needed most, before returning to normal functions.
It isn’t just emergencies that can prevent normal functions for a business, obviously. Either as a result of expansion or downsizing, many companies will relocate during the course of their lifetime. During this time, debt collection companies can be used to provide a ‘business-as-usual’ collection service, operating in a company’s name to provide interim cover and ensure that cash flow remains normal.
Some debt collection agents can also offer assistance when you run into technical issues. With more and more businesses trading on the internet and more money changing accounts across the web, most companies will upgrade their facilities from time-to-time. This can lead to a period of downtime. To prevent losses in both income and customer-confidence, companies are increasingly using debt collection agents to provide turnkey credit control services during transition periods.
Technical resources also make it harder for people to hide from the debt collection agencies. While in the past chasing an absconded debtor or fraudster was a lost cause for companies, debt collection agencies now have the free people look up databases to obtain the background information, debtors’ new addresses and find out if payment is possible or if it’s time to involve the courts.
Of course, the prime function of the debt collector is to collect failed payments. It’s a sad truth but some accounts will go bad, not necessarily through malicious or deliberate intent, often simply through unfortunate circumstances. For a company, chasing late and non-payments is costly in more than just financial ways. It can be stressful and consume time and staffing hours.
From chasing non-payments to taking care of business when the cash follow systems are down, having a debt collection agency on-side is working relationship with many benefits for a company.
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