Debt is something that many of us have become more familiar with in 2020, especially as we deal with the after effects of Covid-19 on our economy. When one business fails to pay its invoices, a knock on effect is triggered, affecting other businesses and suppliers who work with them.
If you’re one of those businesses negatively affected by such a chain, using a debt collection agency can help you to speed up payment of late invoices.
It goes without saying that when you’re entrusting an agency to collect your debts, it’s crucial to choose the one that suits your business type, budget and needs. If you’re finding it difficult to know where to start, or what questions to ask, here are some tips to help you find your debt collection match.
Calculate the total ROI:
When your cash flow has been clogged by unpaid debtors, the cost of debt collection will be foremost in your mind. Make sure you think beyond the initial set-up costs and do the maths on the collection percentage charged by an agency too. Essentially, you want to be able to know how much cash an agency will put back in your pocket once the debts have been paid.
Assessing the cost starts with transparency. Check out debt collection agencies websites. How clear is their pricing? Do they make it easy to understand upfront or is there room for misunderstanding? Transparency and honesty go hand in hand, two factors you are looking for in an agency. At Guardian Credit Services, we are very transparent about our pricing. We are such a believer in being upfront and honest, that pricing is the first menu item on our website.
It’s important to remember that if an agency is unsuccessful at recovering your debt, there’s no cash in your pocket. So be upfront and ask agencies what their debt collection success rate is. A debt collection agency with a low fee rate and a low collection percentage won’t give as high a return as an agency with a higher fee rate and better recovery rate.
As an example, we find at Guardian Credit Services that if a client accepts part payments for outstanding debt owed, once a debtor commences payments we normally recover 100% of that debt over time.
Think of a debt recovery agency as your partner:
When you start to think about a debt collection agency as being another important partner in your business dealings, then it’s time to find out more about them and ask the questions that you would of any supplier or client. A website can give a very good initial view of an agency, but picking up the phone and talking to the customer services team is a great way to learn more.
At Guardian Credit Services, all our clients are provided with their own collections officer, who understands your business and debt collection history, so you’ll always have someone to help with first-hand knowledge of your needs.
Openness, trust and reporting:
Ensuring that you’ll receive regular communications and reporting about your own debt is important. You should expect at least a monthly statement and payment on any accounts, and access to an online portal where you can view your account and current recovery rates. At Guardian Credit Services, your personal collections officer is just a phone call or email away if you need any update on your debts.
It pays to keep late payers happy:
There are many reasons why your clients haven’t paid; sometimes it is beyond their control and they want to pay you as much as you want them to! That’s why communicating with debtors in the right manner is important. After all, when their cash flow issues are sorted, you’ll want to welcome them back as a returning customer. In essence, you’re looking for a debt collection agency with a professional and firm approach, without any menace. Good agencies will make it as easy as possible for late payers to make payments, including the ability to pay through multiple channels and through payment plans.
Look for locally owned and operated:
New Zealand is a nation of small and medium businesses, which make our economy flourish. There’s a comradery between business owners who like dealing with local business owners. Guardian Credit Services has been part of the Kiwi economy for 25 years and like its clients, it’s a SME too!
Word of mouth is golden:
Referrals and recommendations from other businesses are one of the best ways to help you make a final decision about a debt collection agency. If you’re still stuck, have a look at case studies or testimonials on the websites of agencies you are looking at. Good agencies with strong reputations have repeat customers who are happy to put their name online and recommend them.
When looking at testimonials, pay particular attention to businesses of your size and industry, as that will give you a good feel for what the agency can offer businesses like yours. At Guardian Credit Services, after over 25 years in the business, our list of satisfied clients is longer than your arm!
