You can free yourself from the process of dealing with delinquent debtors when you appoint a credit collection agency. It enables you to maintain the cash flow of your business. Collection agencies are best at legally forcing a debtor to pay and a debtor’s credit score gets negatively affected for almost seven years.
- When debt becomes overdue for 30 days
The chance of recovering a debt goes down significantly as time passes by. If you wait for too long, it is less likely that you will get the money back. You should contact the debtor the day after it is overdue and request payment. The party can be given at the most 30-days’ time to pay the debt amount. Once a debt is overdue for more than 90 days, the chances of collecting a debt go down significantly. So you should hire collection agency much before the 90-day timeframe gets over.
- When the debt amount is significantly large
If the debt amount is insignificant, hiring a collection agency is not worth. That means you will have to make sure whether it is financially feasible. For example, it is not feasible for you to hire a collection agency to recover $50 debt and pay the collection agency a fee of $500 for doing the job. However, hiring a collection agency would make sense if the debt amount is $50,000.
- When clients pay late
Even though you send invoices to your clients on a regular basis, some of them end up paying late. If this goes on for long, then at some point of time your cash flow will get affected. A credit collection agency on your behalf can accelerate the payment process.
- When the party is no more important for your business
Besides taking into account the amount owed, you also need to consider the fact that how important is the debtor for your business. If you do not have plans to continue any business relationship with the debtor in the future again, you can hire a collection agency to revive unpaid debt.
- When misunderstandings related to the debt are cleared
Before availing the services of a credit collection agency, any misunderstandings between you and the debtor related to the amount must be cleared. Both parties should clarify the exact amount of debt and reason for the debt so that detailed information can be provided to the collection agency when they start with the process.
When you hire a credit collection agency, you need not spend time pursuing your debtors to pay. This will save your time, money, and energy and allow you to focus on what is more important to run your business.