What to look for when hiring collectors

You have been having some difficulty getting your customers to pay on time and have decided to appoint a debt collection agency to help out with your problem, but what do you look for in a collections agency?

Many small businesses feel that once they have exhausted their own methods to try and re-coup outstanding debts they need to bring on board a go-getting, hard-hitter who will collect their debts quickly. But truth be told, this isn't the best approach to take, especially if you want to get paid and keep your customers!

Find out why you should use a debt collection agencyhow they can help your business, and what you should look for to make sure you get the best bang for your buck.

Why use a debt collector

Before you start looking for the right agency it's important that you have a clear view in your mind as to why you are hiring an outside company to collect your overdue accounts and what the end result should be. For some business owners all that matters is getting the money they are owed while for others, getting the money is important but maintaining the client relationship is even more critical as they want to continue to do business with their customer.

Being very clear about what you want from the outset is important and it should influence your decision about what collections agency you go with. When you talk to potential candidates you should make very clear what your requirements are and make sure they are able to deliver on them.

How can a collections agency help you?

For most small businesses a collections agency is a point of last resort, it's the solution to the problem they couldn't resolve. But, there are actually many benefits that can be derived from outsourcing your collections - these include:

  • getting your cash in the door sooner
  • allowing you and your team to focus on what you do best (and leaving the debt collection to the experts
  • maintaining positive client relationships by separating yourself and your team from the collection process.

Some collections agencies provide two distinct and different services that SMEs can utilise as and when appropriate:

  1. collecting overdue accounts
  2. acting as an accounts receivable function.

So, if you are a small business that doesn't have the time or know how to conduct the collections process in-house, you can use a collections agency to run the entire process for you. If this is the type of service you need you can arrange with the agency to collect the debts in your own company name - that way they are literally acting as an extension of your business. This should be a seamless process so that your customers need not know that you have outsourced your accounts receivable department.

Getting the right collector

Getting the right collector is a really important step in the process as the team you work with can make or break your client relationships. If you take on someone too tough and aggressive because you want to get that debt in the door as quickly as possible, you run the risk of alienating your customers and jeopardising future sales. 

Always remember that the primary objective of collections activities is to improve cash flow and reduce the time it takes to get your bills paid - a heavy hitter might reduce the lag in payment days but they might also be responsible for a reduction in sales as your customers go elsewhere to avoid the aggressive collection tactics. This situation would ultimately have a detrimental effect on your cash flow, the very issue you are trying to address by taking on a collections agency in the first place.

Here are a few things to look out for when you meet with potential collections agencies:

  • Are they problem solvers? You want a person or team that can talk to your customers, identify issues and resolve them quickly and effectively so that you can get paid.

  • Are they organised? Being organised is critical to effectively managing accounts receivable. Your team needs to make sure they know when to send out the accounts, when to follow up and when escalation is required. In addition, they must be able to keep track of all past communications with a particular client so there is absolutely no confusion about any payment agreements that have been made.

  • Are they friendly and personable? Having a pleasant and cooperative team working on your accounts receivable processes is important as they will be in immediate contact with your clients. If you want your money but you also want to keep your customers coming back a friendly and personable collector is critical.

  • Do they have good business sense? You need your receivables team to be able to quickly grasp your company's purpose and objectives. Although you may not think these things are related to the collection of monies owed, having a complete understanding of your vision will help the collector to develop appropriate processes and ways of communicating with your clients about their accounts that fit with your business mantra.
Collecting overdue accounts is a process that most SMEs dread - if your business is facing cash flow difficulties as a result of lagging payments or if you just don't have the time or expertise to carry out the functions of an accounts receivable team, it might be time to call in the experts. The best advice anyone can give you about your bills is to not wait too long to call for help - the longer an account remains overdue the harder it is to collect!

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