5 reasons why it is wise to engage a debt collection agency
Delayed payers hinder the financial health of your company. Chances are that you have too little time or knowledge to adequately collect the unpaid invoices. And the older the debt gets, the harder it is to get paid. Here are five reasons why engaging a debt collection agency is wise.
1. Legal protection
There are numerous laws that apply to the process of following-up unpaid invoices. Knowledgeable customers will not hesitate to file a lawsuit if they feel that you are violated their rights. Debt collection agencies know this, which is why they are well aware of these laws. Engaging a debt collection agency removes the legal risks associated with attempting to collect debts yourself. They can also advise you on what you can do to ensure that future invoices are paid on time.
2. Successful collection
Summoning someone to pay is more than sending a reminder. Debt collection agencies have experience in collecting unpaid debts and have proven to be succesfull in collecting debts fast. After all, the primary focus of your business is running your business, but the primary focus of a debt collection agency is collecting unpaid invoices. A trained professional knows the best techniques to get invoices paid and knows how to deal with excuses. Debt collection agencies are also a much greater threat to debtors than you or your company can accomplish.
"Summoning someone to pay is more than sending a reminder."
Debt collection agencies know that every company has a unique set of needs. They therefore often offer the choice between a standardized approach towards your debtors or one that seamlessly matches the needs of your company. Also when it comes to the payment method towards you as a client. Different payment methods are used in the debt collection world. Some debt collection agencies pursue debtors for a fixed amount. Others work according to the No Win, No Fee principle. With this principle, the collection agency will only receive commission if the amount or part of it has been successfully collected.
Engaging a collection agency ensures proper documentation of the collection process. When debt collection agencies communicate with debtors, this is registered in their debt collection system. Should you decide to sue a debtor in the future, the debt collection agency will have a solid record of every attempt to collect the debt. This documentation shows the court that you have made extensive efforts to collect the debt extrajudicially. In the unlikely event that the debt is not paid, you can claim it as a tax deduction. In this case, the Tax and Customs Administration requires confirmation from a debt collection agency that it is no longer possible to recover the debt.
5. A big stick
Engaging a debt collection agency ensures that companies pay you faster. The statistics confirm that if a company has previously dealt with a debt collection agency because of you, they will now pay you on time. Therefore, it pays to send unpaid invoices to your debt collection agency frequently, for example monthly, for immediate follow-up.