Why outsource your debt collection?
Are your customers' late payments piling up and worsening your cash flow? Are you wondering whether you should entrust the management of your unpaid bills to a collection company? Here is an article to help you make the right choices.
Outsourcing debt collection: What are the advantages?
Outsourcing your debt collection is a strategic decision for the organization of your business; It also has many benefits. It allows you to :
- Refocus on your activity: the action of a collection agency will facilitate and lighten your administrative steps. This will save you time and keep you fully focused on your core business.
- Preserve your customer relationship: when one of the lawyers of the collection company mandated to manage your unpaid invoices takes action, he or she must be sensitive to your debtor. He is the guarantor of the quality of the commercial relationship between the creditor and his client-debtor.
- Benefit from the expertise of lawyers with proven work processes who will give all the time and attention necessary to your unpaid issues.
- Quickly increase your cash flow: if you lack the human resources and expertise in-house to manage a sudden and large flow of unpaid invoices, entrust your receivables to teams that are used to setting up customized and tailor-made processes.
- Master the management of your accounts receivable and identify the friction points and improvement levers throughout the order-to-cash cycle. The debt collectors will be able to report any disputes to you. They will also advise you on the best practices to reduce your delinquencies in the future.
How to choose a collection company?
In order to choose the right collection agency for the management of your unpaid invoices, analyze the qualitative aspects. They are the only ones that can give a true indication of the future performance of your outsourced collection.
Pricing policy is a secondary consideration. Especially when you want to preserve your business relationships with your customers.
Outsourcing collection: What should be prioritized?
Things to prioritize when you want to outsource your collection:
- Respect and ethics Make sure that the mandated collection company follows ethical principles when it comes to communicating with your debtor customers and that it communicates them to its teams (no value judgments, simple and understandable language, transparency and precision in responding to requests for information on receivables, etc.).
- The expertise and skills of the collection managers: check that they master the legal procedures and administrative processes related to the management of receivables. Make sure they know how to use computer tools and financial databases as well.
- Transparency and quality of the collection process: keep yourself informed of how you can follow the progress of your cases in real time. Also, make sure you understand the fees and charges you will be charged.
- In case of in Europe or elsewhere in the world Make sure that the operations are carried out by talented people who master the language, culture and payment practices of your debtor’s country.
- Pay for success: choose a collection company that practices pay for results. The provider who is paid according to what he or she collects will tend to redouble his or her efforts in the course of the assignment.
If you would like more information about debt collection, please contact us.
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