By Andrew Kingstone - Updated on September 22, 2022Debt collection agencies are a stoic resource in the fight against late payment and bad debt – after all its tried and tested. That said there are several misconceptions and misbeliefs about debt collection services, often preventing many from engaging with those that offer the services.
We at Gravity Credit Management have been providing collection services to our clients for in excess of 20 years. There are several misconceptions around debt collection and we know that, by employing the right debt collection agency, you have a very good chance of getting back what you’re owed. We treat your debtors as our own as ultimately, they are!
Misconception about using debt collection agencies
Misconception: It will damage my brand / reputation
Reality: The key is finding a debt collection agency that will respect your brand as much as you do. Also, by introducing a debt collection agency as part of your normal credit control process, one can ensure the agency complements your in-house collection efforts while using their expertise to help you get paid sooner. It really is an extension of your own collection processes.
Misconception: It’s costly
Reality: Many debt collection agencies work on a success-only basis so they will only get paid once they have collected your debt. This will likely be in proportion to what they successfully recover – and is typically based on a commission percentage. The price of our services will be minimal compared to the amount you would lose if you had to write the debt off as uncollectable, and the cash flow implications of it remaining outstanding for longer. Additionally, we are very successful in collecting late payment and interest fees – which can go a long way to covering any additional costs of collection.
Misconception: It’s only for very old debts
Reality: Established research shows that the earlier a debt is referred, the more likely it is to be collected. Instead of wasting valuable time chasing debt for months on end in-house, why not hand it over and see if a debt collection agency has better results? You can even set up an ongoing debt collection facility where the agency will take on any debt which reaches a certain age – a number of clients refer automatically at 120 days, but this is your choice. This helps to maximise their recovery and remove the time and resource burden on your business.
Misconception: Customers will dislike it
Reality: A good debt collection agency understands that maintaining your customer relationships is extremely important and will take your brand as seriously as you do. At Gravity Credit for instance, our preference is polite but persistent engagement when it comes to debt collection, we reaffirm the obligations to pay while explaining the adverse impact their delays will have on our client and their credit rating (where applicable). It is true that some will not like the fact you’ve engaged a debt collection agency, you’ve only done so because they haven’t paid you in the first place and you are within your rights to do what you can to get what’s rightfully belongs to you. This also often gets the business thinking longer term about the relationship with the customer and if you want to continue to be part of this.
Misconception: It’s only for large companies
Reality: We have a significant number of small businesses that refer their debts to Gravity Credit every day because they recognise that chasing late payment is not their expertise and a third party like us is likely to have better results. When you have a small team it’s unlikely, you’ll have the time or resources to chase late payment without having to neglect key business tasks but with a portion of the collection process managed respectfully by another party you could free up time to concentrate on growing your business and still get paid.
Misconception: A solicitor will be more effective
Reality: The truth is that although the legal system can be useful and solicitors can be useful, it can be very costly and time consuming – often on a time and attendance basis. A good debt collection agency like Gravity Credit will prioritise recovering the unpaid sums by working your debtor, preserving your valuable relationship, before taking the legal avenue, and only when required.
A Gravity Credit Management we publish and record topical videos associated with the debt collection and credit management space. For more credit control advice or you have a concern about your collection process within your business then please get in touch. I would welcome a call or email to discuss.
You can get in touch with Andrew Kingstone, (Director at Gravity Credit Management) direclty on 021987622 or email [email protected], if you have any questions or need credit control advice.
