Most financial institutions have the same problem––unpaid debts from borrowers. Though some of these companies have their own debt collection, some of them struggle to collect from difficult borrowers, especially the ones who deliberately avoiding payments.
One of the best options apart from setting up or upgrading your in-house collection department is to consider hiring debt collection agencies, such as JMA Credit Control. Here are some reasons that may convince you:
Avoid Theft
Since debt recovery involves an actual collection of money, there are chances that some debt collectors, even someone you hire personally, would be tempted to take the collected funds and leave. By hiring professional debt collection agencies, you are usually guaranteed that you get your money back.
Legitimate debt recovery professionals often rely on their reputation––something you should consider when choosing which agency you should partner with. In maintaining their clean image, you are assured that you are in safer hands.
Prevent Fraudulent Activities
Debt collection is not simply the retrieval of the amount of debt. It also involves looking into credit and financial details of both financers and borrowers. These financial details are classified and allowing a third-party agency would be a vulnerability.
There are cases that some debt collectors or agents use this confidential information to commit fraud. This would not only devastated the account holder but your company as well.
But by hiring legitimate debt collection agencies, you are assured that everything would be confidential. It maintains not just their integrity, but also the image of your company, especially for financial institutions.
Higher Success Rate On Difficult Accounts
By hiring third-party debt collectors, it is more possible that you recover the debt from problematic borrowers. These agencies usually do different debt collection strategies for different accounts. They analyze which strategies provide a higher recovery rate and apply it to their clients.
With you having a lot on your plate by running a company, it would be an added challenge for you to add the responsibility of collecting from difficult accounts. Utilizing debt collection agencies help you avoid just that. The focus of their work is to assist you in debt collection and nothing more. There are no distractions for them, unlike when you do it on your own.
Improves Profit Or Cash Flow
Since debt collection agencies often provide a higher possibility of recovery, it means that they can help you improve your cash flow. Rather than treating difficult accounts as losses, you get to collect from them without any problem.
One thing that should be considered in any business is the continuous cash flow. For instance, whenever a retail business has non-moving products, it is always the best option to reduce the price to increase the chances of these products to be bought. The thought of getting a profit out of it should not be considered because the more these products stay in your shelf, the higher the chances for it to be considered as a loss.
This is similar to financial institutions. Sometimes, they might consider flexible payment terms for challenging accounts or adjust their profit margin just to be able to collect the amount owed. The collection of these lower amounts is still better than not collecting anything at all––and that’s what debt collection agencies are for.
Better Assistance On Legal Aspects Of Debt Recovery
These agencies are good at their job because they know every aspect of debts, especially when it comes to their legalities. They can work around on different types of contracts or terms so that they can successfully deliver your demands.
Having debt collection agencies that provide great legal assistance could also prevent you from facing legal actions as well. There are borrowers who feel like they are being harassed and turn against their creditors. Since most debt collection professionals know the ethics of debt collection, you can avoid those kinds of borrowers.
You also get to have more legal options when debt recovery becomes more difficult. These agencies can provide you alternatives––or even insurance––that can help you avoid losses from the inability to collect funds.
Time-Efficient And Less Costly
As mentioned, you got a lot going on just by being a business or a financial institution. It would take a lot of time to consider strategizing for problematic accounts if you do it in-house. With hiring professional debt collection companies, you can focus on your business alone and not get distracted by the hassle of collecting from difficult debtors.
It would also be less expensive to hire outside parties when it comes to debt collection. It is because setting up a division mainly for debt recovery from difficult accounts would mean that you have to employ some people as permanent staff.
Consider the fact that not every time you encounter a difficult borrower, but you continuously employ a staff that specializes in that certain problem of your business. This is why third-party agencies really help you, especially smaller companies when it comes to debt collection––you do not always have to employ them, just whenever you need their professional help.
Final Thoughts
Debt collection agencies are there to help you ease your problems, and considering them as you move forward would not just be great for your business, but for your peace of mind as well.