If you own or manage any type of company that offers lines of credit or that accepts any credit card payments, you will probably need to collect debt at one time or another. Even credit cards can seem secure at the time of sale, but might be rejected before the payment is actually processed. While you may be tempted to start making phone calls on your own in order to collect debt, there are some very good reasons to leave this to a professional company to handle. Note a few of those reasons here so you can make the best choice for your company.
Most effective methods
What do you think is the most effective method for collecting debt? You might assume it's phone calls, but if you make calls during the day, many people won't be home or able to answer their phone. If you think it's writing letters, note that these may wind up in the rubbish bin before they're even opened.
Each method for collecting debt will have its own advantages and disadvantages, and a professional debt collection service will know all those pros and cons; they may even employ a variety of methods, depending on the customer or client, type of debt, amount, age of debt, and so on. This will mean using the most effective debt collection methods that will offer the best results.
There are often many legalities involved with collecting debt; even just sending letters and emails can be considered harassment in some cases. A professional debt collection service will know these legalities and be sure to avoid any liability on your part.
When you try to collect a debt, you may assume you should ask for the entire amount repaid to you, but this is often unsuccessful and may not even be the best choice. If you negotiate with your past customers to settle the debt for something less in exchange for a cash payment, you may recover more of the debt than if you stubbornly held out for the full amount. A debt collection service can tell you how much you might offer as a settlement and what terms of the settlement would be recommended as well.
Note that a debt collection service may also be more successful at negotiations simply because your debtors may readily work with them for such a settlement. Debtors may be embarrassed by their past due amounts and not want to discuss it with your company, but may feel more at ease negotiating with an outside third party, like a debt collection service.