Are you considering hiring a debt collection agency to recover outstanding payments but have heard some debt collection myths about the process that makes you question it?
If so, you may be feeling conflicted about what you should do in the matter and if the things that you are hearing are true or not.
If you are considering debt collection, especially if it’s for the first time, it is likely that you are experiencing some difficulties with your debtors, which can add an extra layer of anxiety to an already stressful situation. You are not alone!
Debt collection can be an unknown and intimidating thing to engage in, but it is not as scary as it seems! It can, on the contrary, be incredibly beneficial for your business and help to improve its finances and cash flow.
This is why it is important to have some clarity on the potentially negative things that you are hearing about debt collection so that you don’t miss out on its benefits.
In this article, our debt collectors will discuss 4 of the most common debt collection myths and debunk them so that you can have a better idea of what’s true and what’s fiction.
Debt Collection Myths #1 - You’ll lose the client
The first myth that you may hear about the process of debt collection is that, if you use it, you will lose whichever client the debt collector contacts.
This is absolutely not true and can actually cause quite the opposite.
You see, debt collectors can have a stereotype, as set out by pop culture and such, to be mean and intimidating individuals that clients fear. This is not the case at all.
Most debt collectors are incredibly friendly and due to their knowledge of the field, can treat the process of debt collection with much more respect.
Debt collection can also mean that you have more time to focus on your customer service and the management of the goods between the client so that your business is much more appealing to clients.
Furthermore, the knowledge of debt collection laws that debt collectors have can mean that clients see them as more informed and respectful of their rights!
Your client may also acknowledge the decision your business made to leave the debt collection up to the professionals and see this as a sign of professionalism and care for customers.
Debt Collection Myths #2 - It’s not for small businesses
Another common myth that you may be faced with when considering hiring a debt collector to manage debt recovery is that it is not for smaller businesses.
This is, again, 100% false and debt collectors can be beneficial to any business! It is becoming more and more common for small businesses to use debt collectors to recover their outstanding debts.
As a small business, your resources may be quite limited as you likely do not have the money or connections that a larger business may have.
This may mean that debtors do not take your business very seriously and avoid debt payments that they would indeed make to a big business in the circumstances suited.
For this reason, you may find yourself with a large number of debtors that don’t seem to pay as they do not think that your business has the ability to do much about it.
This may mean that you require a debt collector more than a big business does! Regardless of the size of your business, debt collection can be an incredibly beneficial route!
Debt Collection Myths #3 - Debt collection is too expensive
Another common myth or fear that you may have regarding the process of debt collection is that it is too expensive. This is, again, not true on most occasions.
This is a reasonable concern as you are already without the debt payments that you otherwise should have and are worried about investing any more money into this particular client.
fter all, what happens if the debt collector is unsuccessful, and I have gone and wasted more of my business’s money?
Quite on the contrary, debt collection can be a great investment and a very affordable route.
You see, debt collection agencies will generally work on the basis of “no recovery, no payment”.
This means that, as the name implies, if the agency is unsuccessful in collecting your debt, you will not be required to make any payment.
Debt Collection Myths #4 - Debt Collection is a last resort
Another common myth that is spread about the process of debt collection is that it should only be used by businesses as a last resort and not as a common method of debt recovery.
This is, again, absolutely not true as debt collection can always be of benefit.
As a business owner, there are a lot of different areas of your company that you will have to be aware of and keep in check at any given moment.
It is easy, at times, for it to all pile-up and become a little too much. This can mean that some of the important areas of your business are left unmanaged or poorly done so, which can take an extreme toll on your company.
Areas such as customer service and product quality are absolutely vital to maintaining a strong influx of new clients, but if your debts are not being paid these same areas may be left and not properly taken care of.
This is one of the reasons that make debt collection a helpful resource no matter the current state of your business and debts.
Without the worry of having to manage your debts, you can focus on the other factors of your business and leave the debt recovery to the professionals.
This way, your business can thrive and be the best it can be at any given time!
Other Notable Mentions
Some other things that you may not know about debt collectors include:
- Debt collectors must be licenced - To operate lawfully in Australia, debt collectors must be licenced. This licence assures that debt collectors abide by all applicable rules and regulations.
- Debt collectors cannot harass debtors - Debt collectors in Australia are prohibited from harassing or threatening debtors. Debt collectors are only permitted to contact debtors during regular hours and are not permitted to employ fraudulent or misleading debt collection practises.
- Debt collectors are required to give paperwork - Whenever a debt collector approaches a debtor about a debt, they are required to present a debtor with documentation or evidence outlining the specifics of the debt, including the amount due, the original creditor, and any interest or fees.
- Debtors can bargain with debt collectors - If a debtor is having difficulty paying a debt, a debtor can bargain with debt collectors to come up with a payment plan that works for both parties. In order to recover part of the amount owing, debt collectors may be ready to accept a lesser payment or forego interest or fees.
- There are resources available to assist - If a debtor is having financial difficulties, there are options available to assist them in managing your debt.
Debt collection can be a scary thing with all of the myths floating around out there.
This is why it is vital that you have the information that you need to debunk these myths so that debt collection can work its magic on your business.
Remember, always consider the specifics of your company, and run your own research before committing to any financial decision!
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.