Business owners and managers know they have the option to turn over their delinquent accounts to third-party collectors to boost their revenue, but they are often very hesitant to do so. The reason for this stems from a variety of fears and misconceptions based on industry myths. While being cautious is prudent, giving too much credence to concerns that are unlikely to become reality can really hinder business. Here are the top four myths that businesses should consider before making their decision about using a collection partner:
1. Collectors only specialize in handling very late bills.
Many businesses view collectors as a last resort for extremely late bills. While some companies do use collection partners in this manner, many more use them in early delinquency periods when the chance of getting paid is still relatively high. If an office is short on accounts receivable staffing, a collection partner can perform actions that increase the chance of payment- including things such as address verification. It's difficult for even the best collectors to get consistent payment from extremely delinquent accounts, so being proactive and using as many resources as possible is essential.
2. Collectors will abuse and upset customers.
No company wants to ruin their relationship with a customer even if they're late paying bills. The idea that most collectors use harassing or threatening tactics that upset people is just a myth. Not only does federal law protect consumers from many aggressive tactics, but the best collectors know that getting paid works a lot better when you treat a person with dignity and respect. Of the more than one billion calls that debt collectors place per year, less than one tenth of one percent had complaints submitted to the Federal Trade Commission. Collection partners are responsible for ensuring the longevity of client relationships, not ruining them.
3. Using a debt collector costs too much money.
Expensive agencies exist, but they get most of their business from large corporations. There are collectors who have tiered pricing plans designed to attract small businesses. In addition, companies can usually find out relatively quickly whether or not hiring a collection partner is worth the expense. If the agency brings in more than they cost, then there is no real expense involved. When a collector can't perform their task to the level required, they should be replaced. Of course, most businesses will want to work with a collection partner that can maximize their return on investment.
4. Debt collectors only seek money from the poor and unfortunate.
There's a wide range of reasons why some people and businesses don't pay what they owe on time. Invoices get lost, addresses change, accuracy gets questioned, and general confusion is very common. Collection partners can invest time and resources where payment just requires a bit of extra persistence. Collection partners have more resources, skills, and training than most internal staff, and they can resolve issues that would otherwise go unnoticed.
A few bad actors in the collection industry cause these myths to persist. For small businesses looking to form a partnership with an agency, it's important to do some research and make sure the agency is lawful, honest, and ethical. A reputable collector can make lives easier for both the business and their customers.
Learn more about how Credit Management Company's collection services can make an impact on your bottom line.