Collecting overdue payments can be more of a conundrum than anything else, and with you at the helm of a booming business venture, this task would likely be better off with a debt collection agency where the chances of getting your money back are better.
Be Knowledgeable About Debt Collection
Turning over the responsibility of debt collection to an experienced collection agency can be one of the best financial decisions you can make for yourself and your business. If the thought of having to spend extra bothers you, don’t worry — you might find yourself not having to pay a debt collector at all.
A Signed Agreement
Most businesses have outlined their own Terms and Conditions whenever a new client agrees to make a transaction. This outlines how and when they expect to pay an invoice, and in the event of late payment, what steps the business will resort to in order to avoid debt.
A well-written contract that includes a clause indicating that the debtor shall shoulder any recovery fee incurred by a debt collection agency will save you extra costs. Make sure that the client has agreed to this arrangement by signing the contract before the transaction takes place. If you don’t have such a clause in your contract, allow us to study it for you so you can be more secure in future transactions.
A Favourable Setup
Debt collection agencies offer an attractive setup, a “no collection, no fee” policy. This simply means that only once the debt has been paid will the debt collection fee be deducted from it. If you are seriously considering going after unpaid invoices, then this will be a favourable setup for you.
If you are a business that constantly deals with slow or late payments, then you might want to consider paying an annual premium fee for a debt collection agency. JMA offers a one-time payment of $300 for 12 months, and for every debt collected, there is a reduced commission fee. Enlisting the assistance from a debt collection agency in this manner can help you manage your finances in a more timely fashion.
Fees vary on a case-to-case basis depending on the amount and the amount of time that has elapsed since the last payment hasn’t been made.
Generally speaking, a smaller debt will incur a greater collection fee, as it will require the same amount of time and effort it would take to go after a bigger debt. It will be less rewarding on the part of the agency.
Any unpaid invoices that have been lying dormant for quite some time might also require a larger collection fee as trying to recover it is much harder now, and the effort of trying to reach out and collect from the debtor is still the same. The longer you wait, the more expensive everything will be. To put things in perspective, industry reports claim that for every week that the debt is left outstanding, the chances of recovering it is reduced by more than 1%.
In the event that a legal proceeding is imminent, then additional costs must be expected.
However, do note that not every case would need to be escalated to a hearing. It all depends on the details and paperwork that you submit to a debt collection agency, and when the debtor has made contact with an agent already. A good agency will be able to give you solid advice about whether pursuing a debtor will be of the best interest of your business, or if it will be more costly down the line.
Choosing the Best Agency For You
When you need a debt collection agency, choose one that has had years of experience and has a good recovery rate. Don’t be afraid to ask questions, as most agencies are open to all sorts of queries.
JMA Credit Control has been an active partner with many business owners, with experience spanning more than five decades. We take pride in our debt recovery processes, as well as the promise of a transparent and convenient agreement with our clients.
Get in touch with us today for assistance in debt collection so you can make a smart decision that will help your business prosper in the future.