Top 10 reasons using a debt collection agency is better than going it alone

Why should my business use a collection agency?

That’s a question we hear often.

The fact is there are enormous benefits to outsourcing your debt collections for a small business and even a larger organization.

Having a reputable debt collection agency represent your business is one of the smartest moves you can make. It can improve your cash flow, save you time and money, and protect you from legal challenges.

Check out our top 10 reasons why using a debt collection agency is far better than using internal resources.

Improved cash flow

Hands down, this is the number one reason your business of any size should be partnering with a reputable debt collection agency. The timely collection of those unpaid invoices will go a long way towards ensuring a steadier cash flow for your organization. And as you know, that is vital for maintaining your operations, meeting your expenses, and having the resources to invest in any growth opportunities.

Professional expertise in collecting money

As is often said in the business world, you and your business are good at what you know. When it comes to collections, the collection agency has the expertise you need. A well-run collection agency has the specialized knowledge and skill set to handle your delinquent accounts, which only increases the likelihood of recovering the money owed to your organization.

When it comes to collections, let the experts guide you.

Improving efficiency by saving your organization time.

We recommend following up with internal resources on late-paying customers at the beginning of the delinquency. But when invoices remain unpaid, outsourcing those collections allows your business and your employees to focus their energy and time on core activities rather than spending endless hours chasing them.

Understanding the legal aspects of collections

Collection agencies must remain in compliance with all laws and regulations. That also includes those regulations set forth by individual states. Collection agencies must keep up with not only federal regulations but continually stay in compliance with each state they do business in. By using a collection agency you reduce the risk of having any legal issues that may arise from improper debt collection practices on your end.

Higher recovery rates for your business

Professional debt collectors in most cases will have a much higher success rate in recovering the debt owed to your business than you would get using internal resources. Professional debt collectors are trained in communication skills, negotiation, listening and coming up with resolutions that help both the business and consumer. And when you outsource your receivables to a collection agency, that professional debt collector can spend more time with your customer to come up with a solution.

Preserving relationships with customers

Some businesses feel they will lose customers if they utilize the services of a collection agency, but many times that’s just not the case. Debt collectors that treat your customers with dignity and respect, and help them through a tough financial situation, can mediate a dispute and give the consumer comfort in the form of a friendly voice. When you choose a collection agency to represent your business, you should feel comfortable knowing that they will treat your customers with the respect they deserve. That will help you retain customers.

Saving you money through cost-effectiveness

We talked about the time you would save by outsourcing your debt collections but you can also save an enormous amount of money by not having your internal resources spending countless hours trying to get customers to pay. And when you use a collection agency that has a low-cost debt collection solution, that can be far more cost effective than dedicating your internal resources that are pursuing those overdue accounts.

Collection agencies reduce your stress

That’s right, many parts of collections and having negative cash flow are stressful. And handling it internally only adds to that stress. You cannot only outsource your collections but you can outsource part of the stress of running a business. Just about every part of collections is stressful from the resources you need to put in, the possible tough conversations with customers and of course constantly looking at negative cash flow.

Technology to improve debt collections

Today’s collection agency will be using the latest software and tools that help improve the tracking and recovering of your unpaid invoices. The software allows them to stay on track with your debt collection program as well as quickly referencing any laws and regulations into the state they are calling. And if you’re looking for a collection agency, make sure they have an online portal that makes posting accounts for collection easier for you and your team.

Monitoring and reporting on collection activity

Speaking of that online portal, you should have 24/7 access to your accounts and you should be able to see all the activity that has been performed on your behalf. You should be able to get detailed reporting on the status of collection activity because that will help your business stay informed and make other strategic financial decisions.