Commercial collection agency services are a powerful tool used by many business owners for collecting business debts, including unpaid and delinquent invoices.
When determining whether commercial collection agency services are appropriate for your business you must consider the collectability of your business debts.
As a business owner, you may be certain of the quality and reliability of the products or services offered by your business, but how certain are you that the money you earn is collectible?
Debt Collectability is based on a variety of factors, one of which is documentation. Documentation that supports the existence and viability of a business debt can include product/service orders, itemization of products/services provided with their corresponding costs and a signed contract. The collectability of business debts is much more likely if the documentation supporting the existence and viability of the debt is thorough and complete. One of the most common reasons that a debtor is able to avoid paying debts owed to your business is due to the lack of adequate documentation furnished by the creditor.
Another factor that increases the chance of business debt recovery is the perception that the debt collector, or commercial collection agency, has been given complete power or authority by your business to pursue the recovery of business debts. After a file has been placed with an agency, it is imperative that you give your full trust and authority to the commercial collection agency to act on your behalf and in your best interest in the pursuit of your unpaid business debts.
A debt recovery agency, once given a file to pursue will typically require that you cease all communication with the debtor(s). This requirement is in place as a security measure to avoid the perception from the debtor that they can go back and forth between the commercial collection agency and your business to increase the chance that they can avoid paying their debt.
Commercial collection agency services can help businesses avoid making debt collection a personal struggle between themselves and their debtors. In order to obtain business from customers, a comfort level is typically established by becoming personal and friendly with customers, which creates an emotional bond that is often used later by debtors to avoid paying debts owed to your business. This can be avoided by giving authority to a commercial collection agency to act on your behalf and pursue debtors with whom they have no history or emotional attachment.
When a debtor is informed by a business that the file has been turned over to a commercial collection agency and the debtor is instructed by the business to contact the agency to discuss resolution, they will understand that they are at the end of the road with you and that they must contact the agency to discuss resolution.
Giving the debtor a sense of urgency is another powerful tool that can greatly increase your chances of collecting business debts. Instructing debtors to contact the agency “today” and explaining that you have given the agency the authority to move forward helps to illustrate to the debtor that immediate action is needed by them in order to avoid any unpleasant outcome or undesirable action taken against them. It also instills a sense that you are cooperating fully with the debt collection effort and the debtor is therefore much more willing to discuss resolution with the commercial collection agency.
Are Commercial Collection Agency Services Appropriate for Your Business?
In summary, commercial collection agency services are appropriate for your business if you have solid documentation to support the existence/viability of the business debt owed, you are willing to give complete authority to an agency to pursue the collection of business debts on your behalf, and you are willing to give debtors a sense of urgency to repay their debt to your business.