Businesses everywhere face a major issue today – outstanding consumer debt. To fix the issue one needs to deal with each consumer carefully, have patience, and keep the parties reminded about their debt. However, the real problem arises when these debts reach the point of delinquency.
In such cases, third-party debt collection agencies, as well as in-house collection teams, can offer a business a chance to recover those debts. However, third-party debt collection agencies offer a diverse range of advantages to suit the needs of a modern growing business. According to a study by ACA International, in 2013, third-party collection companies returned $44.9 billion to creditors. The distinctive nature of third-party debt collection makes it easier to recover debts that were otherwise deemed irrecoverable.
Third-party debt collection agencies offer a diverse range of advantages. Let us take a look at some-
The overhead of staffing and running costs would be greatly reduced upon retaining an efficient third-party collection agency. To maintain an in-house collection, some businesses spend big money on staffing, telephone calls, invoicing, visits to the debtor’s office etc. Third-party agencies do not require such investment.
2. Freedom to focus on core business operations
The success and growth of a business depend on the successful recovery of its outstanding debts. The task of debt recovery may keep a business from focusing on their core operation. Therefore, retaining a third party collection agency would give the business the freedom to focus on core business operations.
3. Debtors take third-party debt collection agencies more seriously
Since the business relationship between the creditor and the debtor remains quite close, it may be difficult for in-house collection to be effective. Experience has shown that the debtor would most likely take a third party debt collection agency more seriously than an in-house collection.
4. Third-party collection agencies use modern and effective recovery techniques
The harsh economic climate in a majority of jurisdictions has made it trickier to recover debts. In such situation, orthodox methods that fail to yield positive results. The modern and proven recovery strategies of a third party collection agency enable businesses to recover outstanding debts promptly.
5. Third-party collection agency more efficient in international scene
With the increase in international trade and investment, the risk and cost of going across borders to recover the debt may be more than the debt itself. In such case, in-house debt recovery might not be able to recover the amount. In such a case, retaining the services of a debt recovery agency within the jurisdiction of the debtor will help the business recover the debt.
6. Third-party agency can offer expert help
Also, the process of recovery of some debts may be technical. Hiring a debt recovery expert skilled in the technical process of debt recovery can promptly solve this problem without having to deal with training your in-house debt collection stuff.
7. Improved chance of debt recovery
In many cases, third-party collection agencies are paid a contingency fee upon recovery of debts. Since third-party collection agencies only get paid when the debts are recovered, they have a higher motivation to be efficient and record higher collection rates. Thus, a business has a higher chance of recovering their money by hiring a third-party debt collection agency.