Firstly, it’s important that whatever you do, do it quickly. The longer you wait to collect a debt, the harder it is to collect. The more time you waste on repeating the process of chasing letters, emails and calls the less chance you stand of recovering payment. If your debtor has been unable to pay you, chances are they also owe money to other companies, who will also be trying to action their debt, so it is vital that you are first cab off the rank.
Some factors to consider:
- Make sure this is their speciality. that is, if it’s a debt collection company – make sure, either the debt collection agency or the lawyer, have experience in collecting debts for your industry. Ask them detailed questions and ask them for references from current or past clients.
- Speed. Do you really need the money fast? If you need your money back fast, consider a no win-no fee debt collector. They have the incentive to collect fast, since they want to be paid their commission as well. The legal process can be long and drawn out, so this is a major factor if you have cash flow problems.
- Cost. On larger debts, say over $100,000.00, we always recommend legal action, rather than debt collection. When you have debts of this size, it’s better to secure your debt. This means that your litigation agent can get a court ordered judgment against your debtor to pay the money, plus interest, back to you. This secures the debt for a specific period, depending on the legislation in each state, usually 12 years.
The main advantage to going with a debt collection agency is that they accept the burden of sending collection letters, making calls, and negotiating payment. They will only charge their commission and only when they have successfully collected the debt. Lawyers however, you must pay either way, unless they are also willing to take your matter on a no win-no fee basis. Outsourcing to a debt collection agency, allows you to focus on the important things like running your business.
Lawyers can be a good option when your debtors are refusing to pay. If your debtor is absolutely refusing to pay and you are confident you have a solid contract and you are also aware that your debtor has the means to pay, then legal action is the best option. Debt collectors can only go so far with some debtors, as most of these serial debtors are fully aware that debt collectors cannot enforce them to pay in any way, nor can we charge interest, unless the debtor has previously agreed to it.
Your best option is to choose a company that does both, so you are looking for a debt collection agency with national catchment, that also has a legal arm. Companies that provide both solutions can give you an end to end service. So, they may fail at the commission-based debt collection, but they may then be successful on the same case, by handing it over to their legal arm. They will be able to give you a realistic solution, depending on your needs, rather than suit their own needs, which a stand-alone law firm may tend towards.
A letter from a solicitor is often enough to prompt a debtor to take action, especially if they are threatened with court proceedings. Consider perhaps a debt collection agency that provides free legal letters of demand as part of their service.
What agency provides all these services you ask? Give us a call and we will steer you to a highly reputable agency ready and able to help you.
Call our office on 49336888
No comments yet.