Choosing the right debt collection agency for your business
It’s an unfortunate fact for businesses that a significant amount of time is spent chasing up payments (often from larger corporations). As a business owner, there may come a point where you’ve given up on receiving a payment altogether and need to focus on other aspects of running your business. In these instances, you should consider passing the job on to a specialist. Here, 1st Formations cover the key things you need to consider when choosing a debt collection agency.
Choosing the right debt collection agency for your business
It’s an unfortunate fact for businesses that a significant amount of time is spent chasing up payments (often from larger corporations). As a business owner, there may come a point where you’ve given up on receiving a payment altogether and need to focus on other aspects of running your business. In these instances, you should consider passing the job on to a specialist. Here, 1st Formations cover the key things you need to consider when choosing a debt collection agency.
Are they regulated by the Financial Conduct Authority (FCA)?
The FCA are tasked with overseeing the UK’s financial markets. This includes regulating debt collection agencies. Despite this, not all debt collection agencies are FCA-regulated.
This is because being regulated by the FCA is only compulsory for agencies that collect on behalf of financial service providers (for example, businesses that provide loans, credit cards and insurance).
However, when an agency has been granted permission to collect by the FCA, you have a level of assurance that the business collects in an ethical way, and if you are unsatisfied with the service you receive, there are processes in place for you to make a complaint. Because of this, we recommend only working with FCA-regulated agencies.
Do they have positive reviews and testimonials?
As you probably would with any other service, when researching debt collection agencies, look at the reviews they receive on platforms such as Google, TrustPilot and Feefo, as well as sites such as Glassdoor. Whilst Glassdoor is a reviews platform for employees and job candidates, rather than customers, how a business treats its employees can give you valuable insight.
On top of this, scour the agencies’ websites looking for testimonials, not only paying attention to what they say but how many there are.
Will the debt collection agent respect your clients?
Just because an agency has been called in, does not mean that your relationship with the client is beyond redemption. We urge you to only work with agencies who operate in a respectful way and in a manner that does not end all hope of you working with the client again.
Of course, there will be times when a client has been remarkably difficult to deal with or owes you a large amount of money, however, even in these instances – you should recognise that the agency is working on your behalf, and so is an extension of your business, and any poor practice will look bad on you.
How much does it cost?
Obviously, you must look at how much the agency is charging you and the terms on which they provide their service.
Is it no win no fee, but with a large percentage taken when the debt is recovered, or is there an upfront cost and then a smaller percentage rewarded on what’s retrieved? Alternatively, are you just selling on the debt and leaving it at that?
What you end up paying will typically depend on how large the debt is, as well as how old it is.
The terms need to work for you, so we recommend shopping around, speaking to actual people and explaining your situation.
What does your gut say?
You need to be confident in the agency’s ability to deliver its service in a way that makes you comfortable.
Consider the interactions that you have had with each agency. Their website, their emails and conversations. You need to forget about the actual service that they’re providing and treat it like any other business relationship.
If you trust the agency and believe that they can provide you with the service that you’re looking for at an acceptable rate, by all means, get them on board. However, if you have any concerns, continue your search until you find a suitable debt collection agency.
Thanks for reading
So, there you have it, how to choose a debt collection agent that’s right for your business. We hope you have found this post helpful.
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