What All Businesses Must Know About Debt Collection

 Debt collection guidelines and recovery

It can be extremely frustrating if someone owes your business money. They may be ignoring your emails, dodging your calls, or just being evasive. While unpaid debt is sometimes seen as a ‘normal’ part of business, it can be challenging getting the debt recovered by yourself.

If you’re not at the stage of hiring a debt collection agency, we suggest you consider the following:

  1. Professionalism: While staying professional when you’re trying to recover debt by yourself can be hard – it can help reduce any conflict between yourself and the customer. We suggest you send the customer a letter and/or email reminder about the payment they need to make. Include the amount outstanding and period with which they need to repay the amount. This ‘gentle reminder’ is the first step to recovering debt. However, sometimes customers will ignore this, which will require further communication.
  2. Systematic: It is very important to have a system of communicating with your customers about the money they owe. Following each notice period with a basic letter or email, will give your customers reminders about the impending situation. The final letter is a letter of demand that is critical before referring the matter to a debt recovery agency.
  3. Keep Records: If you have customers that are avoiding trying to pay their debts, it is imperative that you keep and maintain records of purchase, email chains and phone calls. This will strengthen your argument against them and if legal problems arise, you will have the best possible chance of success.

Because every business is different, there is no ‘right time’ to contact a debt recovery agency. In our experience, it can depend on the amount outstanding and the relationship you have with the customer. Some businesses contact debt collection agencies after 2 or more overdue reminders have been sent, without payment. Many of our clients tell us that the introduction of a debt collection agency can be enough to get their customer to pay immediately.

 

What do debt collectors do?

A business or company that needs to recover money that is owed to them can hire debt collectors. Many large corporations have their own in-house collection team but still outsource the difficult debts to a debt collection agency to recovery money that is outstanding. If you are a smaller business and don’t have an in-house collection department, you can use a debt collection agency to recover your outstanding accounts.

In recent years, debt collection agencies in Australia have become more affordable and adaptable to cater for every size of business.

 

The best way to choose a debt collector

If you type ‘debt collector’ into an Internet search engine, you will be confronted with a lot of options to choose from. It is important to note you need to be very careful with the debt collector company that you choose to recover your debts.

Legal requirements and rules govern the way debts can be recovered. If the debt collector company you hire breaches these, it will reflect poorly on your business. Before you engage a debt collector, we suggest you ask the following questions:

  • Do they provide a dedicated account manager for all your debts from start to finish?
  • Does the company have in house solicitors?
  • How long has the company been operating?
  • Does the company offer a no recovery, no fee service?
  • Do they have testimonials of happy customers on their website?
  • Can you talk to a real person before lodging your debt?
  • Do they have an online service that allows you to track the progress?
  • Do they offer a discount for referring multiple debts?

A debt collection agency with experience and a good reputation should be able to answer these questions satisfactorily for you. If you don’t get the answers you feel comfortable with, we invite you to call us on 1300 588 728 for a no obligation chat to discuss the best next step.

 

What you need to look for in a debt collection agency

To help you choose the best debt collection agency for your business, we suggest you use the following 4-point checklist:

1. A good fit for your business

When your debt recovery agency is the right fit for your business, it can help maximise your chances of recovering your debt. If you’ve been recommended to use a debt recovery agency, it may not be the right fit for your business. Some debt collection agencies work exclusively for small businesses, while others work with larger companies. And some debt recovery agencies specialise in specific industries.

2. A fee structure that suits your business

You get what you pay for with debt recovery. Choosing the cheapest debt collector probably can mean that they’re the least skilled. While you should never choose a debt recovery company based on price alone, we understand that it is important to your business. Check that the fee you pay your debt collector will not cost you more than simply writing off the debt entirely. It is also worthwhile to ask whether the debt collection agency be billing you based on contingency or charge you for sending letters of demand.

3. Excellent communication skills

Choosing to hire a debt recovery agency can be prompted because the experience of dealing with debtors yourself has become time-consuming and frustrating. When you hire a debt collection agency it’s important to ask what their communication process is like – from being updated regularly to being informed as to when you can expect to see your debt being paid in full.

4. A solid track record of satisfied clients

Finding out if the debt collection agency you want to hire has a positive track record is a good step to take. You will have peace of mind if you know their clients are satisfied with how their debts have been collected

 

How to engage the best debt collection agency in Australia

With over 50 years’ experience, JMA Credit Control has been helping companies of various sizes recover their owed debts. We follow best practice standards, and maintain professionalism throughout the entire process, treating every person with understanding and respect.

Our quick and efficient legal procedure provides you with fast and responsive service. And you can even track the progress of the accounts with our live online client portal

Been having troubles with your customers delaying payments or avoiding contact with you? Call us on 1300 588 728 for a no obligation chat to discuss the best next step. We work with businesses throughout Australia and have offices located in Melbourne, Sydney & Brisbane.

 

Written by Richard Thompson

Richard Thompson is the Managing Director and owner of JMA Credit Control and has over 25 years’ of trusted experience. Richard has a wealth of knowledge in Credit Management and Debt Recovery ensuring client’s recovery bad debt quickly and cost effectively.

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