Debt collection myths are prevalent in our society. This article attempts to debunk those debt collection myths.
It is estimated that thousands of small businesses use Debt Collection Services everyday, these debts vary from large debts worth thousands, to smaller debts worth hundreds.
Advanced Debt collection can help you focus on what you are best at, making your product or providing your service, while we focus on what we are best at, collecting Debts and assisting with cash flow strategies.
In this article our debt collection agents attempts to debunk 13 debt collection myths.
You can only use a Debt collection Agency when your debt is well overdue
The first debt collection myth is is that you can only use a debt collection agency when your debt is well overdue.
This is not entirely true or even recommended, while it can be a good option depending on your personal and professional circumstances to not rush into engaging a Debt Collection Agency, it is not always necessarily the better option to wait a prolonged period of time.
Set out a timeline in which you expect to be paid, and give some thought to engaging a debt collection agency as soon as the invoice becomes payable.
Will my customers be scared away if I am utilising a debt collection agency?
The next debt collection myth is that your customers be scared away if you are utilising a debt collection agency.
This may happen in some circumstances, but at Advanced Debt Collection we are understand that the goal of engaging us is to be paid, not to harass people.
We believe in an approach that gets people paid while still being respectful to those who we communicate with.
We appreciate the effort and time that has gone into building your brand and will continue to work within communication and brand guidelines when assisting you with collecting your debt.
We can also work as part of your standard accounts receivable and payable team to establish a company best operating procedure.
Isn't it more beneficial to hire a lawyer instead?
The next debt collection myth is that it is it more beneficial to hire a lawyer instead.
While in some circumstances it will be necessary to hire a lawyer to recover your debt, this should be the very last resort.
The reason being is that it can lead to legal fees that do not always lead to repayments of the debt.
When engaging Advanced Debt Collection as your debt collection agency, we don't require any payment until you yourself get paid.
In the event that legal action is the most viable next step, we partner with Stonegate Legal, to ensure the transition from debt collection to legal proceedings is as smooth as possible.
Does using a debt collector damage my brand?
The next debt collection myth is that using a debt collector damage your brand.
This is a common question and the most accurate answer is most likely 'it depends who you choose as your debt collection agency'.
At Advanced Debt Collection we strive to uphold your brand, while also maximising your cash flow potential.
Establishing a business relationship with a debt collection agency isn’t important
The next debt collection myth of the thirteen debt collection myths is that establishing a business relationship with a debt collection agency isn’t important.
At Advanced Debt Collection, we strive to create a relationship that is commercially viable, for all concerned.
From the company that hires us, to working with debtors to ensure debt is paid back in a way that is sustainable and speaks to your long term cash flow goals.
Establishing and upholding a Credit Policy, is it necessary?
The next debt collection myth is that establishing and upholding a credit policy is not necessary.
We are able to act in accordance with your pre-existing credit policy, to ensure that customers do not end up feeling as though they are being treated unfairly or in a way that contradicts original company policy.
At Advanced Debt Collection we believe that the debt collection process works best when there is a relationship between the collection agency and the creditor.
Don't debt collectors use unsavoury methods and harass people to collect debts?
The next debt collection myth of the thirteen debt collection myths is that debt collectors use unsavoury methods and harass people to collect debts.
Well, it depends. At Advance Debt Collection, we work with you and try and implement methods that you would prefer, that would remain in line with your business models.
Advance Debt Collection follows industry best standards to ensure debtors are treated with respect and not harassed.
Court and hiring lawyers is always quicker than engaging a debt collection agency
The next debt collection myth is that hiring lawyers is always quicker than engaging a debt collection agency.
It is not always quicker, and certainly can be more expensive, so the decision needs to be made very carefully.
For example, a hearing or a trial in the Magistrate's court may run up lawyer bills which are in excess of the debt you are owed.
Whereas, when hiring Advance Debt Collection to assist with your debt, we work on a commission basis, so we do not get paid until you do.
The court will make an order for identities of debtors to be revealed and you will know straight away
The next debt collection myth of the thirteen debt collection myths is that the court will make an order for identities or whereabouts of unknown debtors to be revealed and you will know straight away.
While in some cases court is the best course of action, it does not always lead to what you would expect in terms of results.
Before paying for your lawyer to make this sort of application, you could consider instructing Advance Debt Collection to conduct a skip tracing process.
The Skip tracing process involves a thorough search of information and records in an attempt to discover valuable information of the debtor which may amount to an increase in likelihood of your debt being recovered.
With engaging lawyers, costs can be more than the amount owed, can't they?
The next debt collection myth is that by engaging lawyers, costs can be more than the amount owed.
This is hypothetically possible, however we work with an experienced law firm which is mindful of the ongoing costs of proceeding with legal action and attempt to provide updated scope of fees as frequently as possible, and advise on when it is unlikely to be commercially viable for you to hire lawyers in the first instance.
I don't need any specific policies for payment schedules.
The next debt collection myth of the thirteen debt collection myths is that you don't need any specific policies for payment schedules.
Some recent trends seem to suggest that businesses are being exploited by a lack of debt collection policies.
Large companies, who do not negotiate with the business or the debt collection agency commissioned by the indebted company/ business, are taking advantage of this trend of no policies surrounding pay schedule policies.
Some sources indicate that even companies with no cash flow or other sorts of issues legitimately requiring a payment plan are not paying until numerous demands are made.
With a payment policy in place prior to the goods or services being provided, you may avoid the need to engage a debt collection agency, or even reduce the time and expense spent on a debt collection agency.
As a result of our years of experience, and too our partnership with a debt recovery and litigation law firm, Advance Debt Collection can assist with establishing specific policies that work for you.
Email address is enough to ensure that I will be paid
The next debt collection myth of the thirteen debt collection myths is that an email address is enough to ensure that you will be paid.
People often think that one point of contact is enough to ensure payment.
While in some cases debtors will pay an invoice after being emailed a reminder, it is not always the case.
For example, if you are a contractor who worked at someone’s home, or their businesses premise, you have the opportunity to hand them a physical paper copy, as well as sending them SMS and email reminders.
In this instance, you have three points of contact to encourage and remind them of the due date and the amount to pay.
I don’t have the money so I don’t have to pay.
The last debt collection myth of the thirteen debt collection myths is that if a debtor does not have the money, then they don’t have to pay.
When someone can’t pay their debts, they are considered to be insolvent.
In some cases this insolvency may mean they don’t need to pay, however it is often the case that there are options available, such as some form of payment plan that can be arranged, in many cases, avoiding insolvency is the preferred path for both the creditor and the debtor.
A debt can, depending on the instructions provided to the debt collection agency, be paid back in instalments.
At Advanced Debt Collection, we have experience negotiating the best possible repayment plan for clients, while also working with debtors to ensure that as often as possible there is an outcome for everyone that works.
If you are in need of assistance with any of the above methods and strategies, Advance Debt Collection can assist.
Do you have unpaid business invoices or debts to collect?
Advance debt collection is an Australia-wide commercial debt collection agency and credit and accounts receivable management. We can recovery your debts, conduct skip tracing, and manage your accounts receivable. We collect your debts for commission only. This means no collection, no commission. We are professional debt collectors with combined 20 years of experience to help you collect your debts. We are partnered with expert litigation lawyers with years of experience in debt recovery, enforcement, and insolvency. Under the Agents Financial Administration Act 2014 Advance Debt Collection Pty Ltd hold authority number 4583821 to act as a debt collector. ADC Advance Debt Collection® is a registered trademark.