10 benefits of working with a debt recovery agency part 1

A one off debt, a series of aged debts or regular non-payers can seriously affect your cashflow. With the potential to impact upon other areas, recovering overdue debts is vital for the health of your business. With several debt collection options available to you, it can be difficult to know which is the best option for you and your business.

To help you make a more informed decision, here we explain some of the key benefits of working with a debt recovery agency. If you’re short on time, take a look at the at-a-glance outline of the benefits using the infographic.

Benefit 1 of working with a debt recovery agency: The majority of debts are recovered pre-litigation

The majority of debts are recovered without the need to issue legal proceedings. That means you, the client, is likely to be paid quicker and more cost effectively than if you enter into litigation.

Generally pre-litigation debt collection is the core service within a debt recovery agency. Therefore every step taken will move you towards the end goal of recovering your debt quickly, without the need to issue legal proceedings. In support of that core service, some agencies do offer litigation. However, for most, it is the last resort and we will cover many of the reasons why throughout this article.

A bespoke approach for your business

At the outset, a good debt recovery agency gathers the details of the debt and quickly understands your business. Their knowledge and debt collection experience spans most industries.  This is vital to help judge the tactic which will secure your money in as short a time as possible.

A proactive approach is crucial in all circumstances. By entering into positive communication with the debtor early on, any issues are discussed and resolved sooner than otherwise.  Usually contact with your customer or debtor is made by letter, email or telephone, or a combination, to help secure payment.

If payment is not forthcoming immediately, at the very least the door is open for a conversation.  This takes you one step closer to being paid. Seeking to understand the reason for non-payment saves time further along the line.

Where an agency has significant experience in debt collection they spot when a debtor is being less than honest and cut through the excuses

Benefit 2 of working with a debt recovery agency: The service is tailored to your business needs and will be sensitive to your customer relationship

Every business is different, even those within the same industry. Therefore it does not make sense to expect the best result for every client by taking the same approach to pursuing their debt.

Insight into your industry

As we talked about earlier, quickly understanding your business is important. It’s one of the key elements for effective, efficient debt recovery. It influences the approach taken and therefore its success. An experienced debt recovery agency takes the time needed to pursue your debt in a manner which will get you paid as soon as possible.

They work with clients across many sectors and therefore have useful industry knowledge as well as specialist contacts. Industries include commercial, construction, insolvency as well as many small businesses, SMEs and start ups.

A flexible approach

A part of the role of an agency is to make your life easier too. Therefore it’s important to appreciate how you, the client, will benefit the most from working with a debt recovery agency – beyond recovering your debt.  You may prefer to instruct the agency and leave them to do what they do best. Alternatively you may want to be actively involved in the process. A good agency is flexible in their approach.  They work with you in the way that will be the most helpful to you.

No matter how involved or otherwise you are in the process, one element is likely to remain the same. Ordinarily, the agency manages all communication with your customer or debtor.  A reputable agency is always sensitive to that relationship.

Your customer or debtor is treated with professionalism

In some cases you will prefer to retain a working relationship with the customer. In others it’s unlikely you will want to work with them in the future. Either way, the customer relationship is important.

Within effective agencies, courteous, calm communication is coupled with a bold, proactive and professional approach

When the debt is agreed to be outstanding and payment is forthcoming, everybody’s lives are easier! On the occasions when a debt is disputed, a good agency establishes the facts from your point of view, as well as the debtor’s view point.

They listen to the debtor, acknowledge their points and respond objectively.  Always in your best interests. Such considered communication ensures that you and your company are represented in the very best light. It preserves your relationship with your customer.  At the same time it lets them know that you are serious about recovering money owed to you.

Benefit 3 of working with a debt recovery agency: If the debt is not collected pre-litigation, it does not cost you a penny

A no recovery, no fee charging structure is commonplace within a debt recovery agency. Therefore working with an agency is risk-free as far as the financial outlay is concerned. But working to this charging structure is not completely risk-free.

If the agency’s approach is not as professional as you would expect, there is a risk to your reputation. If their approach is ineffective, there is a risk to your cashflow.

The point here is that whilst working on a no recovery, no fee charging structure is beneficial – almost always preferential to other structures, be careful when choosing who will represent your company to your customer or debtor.

Benefit 4 of working with a debt recovery agency: Litigation is the last resort

Debt collection is generally the core service for a debt recovery agency. A successful agency always aims to secure payment of the debt without the need to issue legal proceedings. This greatly influences the process.

Sending a letter or two before quickly moving on to litigation is not how a serious debt recovery agency works 

We talked earlier about understanding your business, and your preferred way of working. A good agency recognises the style of communication which will ensure the most helpful response from your customer or debtor. This is vital to ensure that they understand the situation clearly and quickly. It helps prevent the matter taking longer than necessary, and the need to issue legal proceedings.

Effective and amicable negotiation

If the debt is disputed, such communication lays the foundations for amicable negotiation. It helps reach the root of the issue sooner and reach a resolve much quicker.

Effective negotation is equally important to help avoid litigation.  Not all debt collection is as straightforward as any of us would like it to be. An experienced agency’s negotiation skills will have been thoroughly tested and honed over the years. Striving to get you paid without the need to issue legal proceedings means that this part of the process is fundamental.  Negotiating skills are crucial.

Benefit 5 of working with a debt recovery agency: A choice of cost effective litigation services and enforcement options

Despite best intentions and very best efforts, not all debts will be recovered pre-litigation.  A good debt recovery agency will not leave you high and dry. A comprehensive agency has significant experience of working in or alongside law firms and offers litigation as part of their debt recovery services.

Trusted and industry-specific legal expertise

An experienced agency works with a panel of trusted solicitors.  They are chosen for their outstanding legal expertise and each with industry-specific knowledge. For you, the client, this means that whichever industry your business is a part of, you have a trusted solicitor working alongside you with industry knowledge and insight.

‘Two heads are better than one’ or so the saying goes.  In this instance, it is absolutely correct.

Enforcement advice based on extensive experience

Once judgment has been secured it’s likely you will be advised on the most effective enforcement option. There are many options and selecting the most appropriate for your circumstance is critical to its success. Instructing County Court Bailiffs or High Court Enforcement Officers is an automatic choice for many but not always the one which will get you paid quickly, or at all.

A good debt recovery agency will consider all enforcement options including County Court Bailiff, High Court Enforcement Officer, issue of a Statutory Demand or Winding Up Petition, apply for a Charging Order, Attachment of Earnings Order or Third Party Debt Order

Each is effective in different circumstances and you should be advised as to the best option for you before wheels are put in motion to enforce the judgment.

The points covered should help to make a more informed decision.  If you’re still considering your best option, it may help to read the final part of this article.

We hope you have enjoyed this article.  If you would like to read about other issues which could affect your business, please visit www.colligant.com

FREE 30 minute consultation

For a limited time, we are offering a free 30 minute consultation to support you with advice or a second opinion.

Simply let us know who you are and how we can contact you.  We will do the rest...