How a Collection Agency Fits With the Roles In Your Business

How a Collection Agency Fits With the Roles In Your Business

One of the most powerful mechanisms triggered when you engage a debt collection agency is third-party psychology. The reality is that non-paying debtors (whether individuals or businesses) who ignore multiple gentle reminders have consciously chosen to dishonor their original commitment by not paying your company. They’ve weighed the options, and for one reason or another decided to re-allocate the promised money to something else. In such a situation, it becomes very hard—sometimes impossible—to collect what is owed to you on your own.

But when a professional third party steps in on your behalf, the dynamics change entirely. It’s no longer you or your employee pleading to be paid (often semi-apolegetically). Now it’s a collection professional asserting your end of the bargain with authority—and consequences. An accredited collection agency can report unpaid accounts to major credit bureaus, trigger lasting impact on the debtor’s ability to secure further credit. This combination changes the game, making collection through a collection agency more effective than in-house efforts and usually faster than litigation.

To achieve this, it is helpful to understand how the collection agency can benefit everyone in your business—and to ensure your team members enterprise-wide can also appreciate how far-reaching the relationship can be. The better the collection agency’s role and that connectivity is understood, the more effective use your business can make of it.

For the CEO, CFO and stakeholders, the best collection agencies add value by supporting positive cash flow in all economic cycles. A business that uses a collection agency most effectively is methodical and sends accounts out like clockwork, based on a written policy. I recommend 60 days past due as the maximum during uncertain times—increasing the likelihood of collecting before secured creditors and the taxman claim all the available money from a debtor business in trouble. The result is invariable fewer bad debt write-offs, and better profits.

Sales managers and their teams appreciate how a proactive and retension-focused collection agency can avoid the painful moments when hard-earned accounts must be frozen, and the business can be lost due to mishandled internal collection efforts. (And for sales reps charged with the awkward duty of collecting debt on their accounts, there is no greater relief than having one’s employer bring on a good collection partner.)

Marketing departments also benefit from the use of a good collection partner. A central part of marketing is reputation management, and the best collection agencies understand the vital role they play in representing the brand positively, particularly in consumer collections where customers can often turn against the brand when collections are managed improperly. The most professional collectors recognize the importance of win-backs when the customer’s situation turns around, because every client’s customer pool is finite. And while even the most tactful in-house collector can put the brand under fire, a collection agency relationship places precious distance between its client and the role of collection—buffering the backlash with customers who will invariable prove more volatile.

Accounting teams often directly benefit most of all from having a reliable collection agency to partner with. Most accountants, bookkeepers and even Accounts Receivable managers are delighted to have the task of placing collection calls delegated to a team of debt recovery professionals, removing what can be the most dreaded and stressful part of their workday. Needless to say, job satisfaction and turnover for accounting roles tend to see a huge positive impact from working with an effective collection agency.

Because it’s such an impactful relationship, be sure to do your homework when making the decision to partner with a collection agency, Look at online reviews (and how the agency responds to debtor complaints as well as customer posts), BBB ratings, and even pay a visit to the collection agency’s office if they allow it—my own have always had an open-door policy. Be sure the people within your organization understand how the new engagement benefits their job, the company and the brand. Done right, it can be a powerful step forward for profitability and for everyone’s job satisfaction.

Author:

Brian Summerfelt

President and CEO of MetCredit

Canada’s top-performing

consumer and commercial collection agency

Real Home Advice

Real Home Advice

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