The business world is fast paced, especially when you own and/or run a business.
You need to keep up with customer demand, your own staff and the everchanging landscape of your industry.
This all takes a lot of time, so at the end of the day, you’re not often left with a lot of time to spare.
So, when it comes to your business and its processes, you want to ensure you and your team are using the best practices possible. You basically want maximum efficiency in every meaning of the word.
Efficient practices and processes can vary from business to business, but one practice that is all too often overlooked, is the use of debt collectors to recover outstanding payments and debts from your customers.
Unpaid debts and invoices are a very strong nail in the coffin of many businesses and can lead to frustration and high levels of stress for anyone looking after a business. Debts owed to your business can impact your cash flow, and if it happens regularly enough, it can destroy your business.
As debt collectors, we’ve seen it happen time and time again, delinquent customers who have skipped out on their bills have left business owners on their knees, struggling to survive.
While we might have a slightly biased opinion when it comes to using debt collectors, today, we want to talk to you about why you shouldn’t be afraid of using a debt collection agency when it comes to managing your business.
But, before we jump into the reasons why you should use us, let us first talk about why some businesses overlook using a debt collector.
Why people don’t use debt collectors
It’s no secret that debt collectors have a not so positive reputation.
Debt collectors are often seen as scary, burly blokes who will use all sorts of scare tactics to squeeze every last dollar out of the person they are recovering debts from. Now, we can’t deny that there are some dodgy folks out there, but we do think that this reputation stems more from Hollywood and the Silver Screen, rather than from the reality of real people’s experiences.
In Australia, debt collection has some serious rules surrounding it, so no reputable debt collection agency out there is going to be using threats, intimidation or scare tactics to get money out of you. Instead, we have amazing systems and resources that allow us track people down easier than an ordinary person can.
The negative reputation that surrounds debt collectors is certainly one of the reasons people avoid using them.
Another reason people and businesses may not use a debt collector is because they think that it’s a super expensive process, that even if they get their debt recovered, they are going to be paying most of it to the debt collector.
There are costs associated with debt collection, however, they are not as steep as you might believe. The fee structures may differ from debt collection agency to debt collection agency.
Some of the common fees you will see include:
- An annual subscription – this is where you will likely have ongoing debts to recover, likely from various sources. This option usually involves paying an annual fee, and then commission on top of debts recovered. Many debt collection agencies will have reduced commission fees when using this option (like us!)
- Commission for one-off collections – this is where you may only need one debt recovered, or multiple debts, however, it’s not very frequent. You will likely pay a small fee to get started, and then pay commission on top, and this commission will be based on the value of the debt. The commission you pay on this debt is likely to be higher than if you had a debt collection subscription, however, the payoff to this option is that many agencies will have no recovery, no commission fee structure. So, if no debt is recovered, you’re not paying any extra.
An important thing to note about debt collection is that the value you get out of the service is definitely dependent on the value of the debt you’re recovering, and if recovering debts is something that you’re spending a lot of time on.
Debt collection may not be the right course of action for every business, but here’s why you should at least consider it as an option for yours.
Here’s why you should consider using a debt collector for your business
1. Delegation to a professional saves time and money
The old saying, “time is money” could not be truer – and that’s for everyone, not just business owners. However, if you are a business owner, chances are there are just not enough hours in the day to everything that you want to or need to.
Outstanding payments, especially if there are many or they are quite high in value and affecting your cashflow is certainly something that is going to capture your attention.
Now, there is nothing wrong with that, as a business owner, it is great to be abreast of these sorts of situations. But should you really be spending your time trying to get this outstanding money? The answer to that is no.
There should certainly be processes in place for you or your team, specifically, your accounts receivable team, to manage situations like this. However, even with processes in place, they will only get you so far.
So, once you hit the end of the line in your outstanding invoices payment process, this is where you should stop using your time and team to recover these debts, and let the professionals step in.
Now, while there are fees associated with debt collection, using your team’s time or even worse, you own, is also costing you money. It’s costing you money because that is time that is taken away from your normal job and your normal day to day running of the business.
And if your team is unsuccessful at recovering the debt that debt is going to end up costing you a lot more than the fees of a debt collection agency.
2. Debt collectors have resources you don’t
When we talk about resources here, we don’t mean the team members or time to do the task, we mean the actual tools and access to resources, information, and directories that you won’t have.
Debt collectors undergo a lot of training and have access to various systems that allow them to be able to track down people significantly faster and easier than an ordinary person.
Many reputable agencies also have the added benefit of having a wealth of experience and knowledge on hand that can make it even easier to recover a debt.
3. You can get valuable advice from experienced debt collectors
Debt collectors’ wealth of experience and knowledge is extremely valuable for your business.
Their advice can help with knowing when and what kinds of debts are able and should be recovered. From our many years of experience, we know when a debt is likely to be able to be recovered, we also know when it’s not worth trying to recover a debt.
While we can offer advice about the debt collection process, many of us, like us here at JMA Credit Control, also offer various other valuable business services. For example, we also offer credit insurance to protect your business, credit reporting, to help you weed out potential red flag customers, and credit consultancy, where we can evaluate and advise you on how best to handle your credit management processes.
Debt collection agencies can often be multifaceted businesses that can help you improve your business’ processes.
4. Futureproof your business with a debt collectors help
A debt collector can actually help your business last longer and well into the future.
Besides collecting your outstanding debts and ensuring your cash flow is actually flowing and you aren’t spending time on things you shouldn’t be, a debt collector can also help cement your reputation as a business that does things properly and by the book.
What do we mean by this? Well, sometimes just the knowledge that a business will enlist the services of a debt collection partner if you were to renege on your invoice or customer agreement can be enough to make the potential delinquent customers stay away from you. It shows that you’re serious about your business!
5. Your chances of recovering debts and outstanding payments are significantly higher
We mentioned that we have the resources and experience to help us recover debts, and trust us, this goes a long way.
When you decide to go it alone and attempt to recover outstanding debts, there is a good chance that you will be unsuccessful. So, not only are you spending a lot of time trying to recover these debts, but time also that you could have used actually running your business, helping other customers, or making your goods, you’re not even guaranteed that you will get that money back.
Now, while there is always a chance that a debt collector may be unsuccessful in recovering the debt too, the likelihood of this being the case is a lot lower. Our years of experience has led us to become creative and find ways to work with both the debtor and the debtee to come up with the best solution and something that will work for both. And our years of experience have allowed us to see this take place and give us ideas to be able to make it possible.
Work with the best debt collectors in Australia
If you have a small to medium sized business that is struggling with outstanding customer debts, then why not speak to us today? Here at JMA Credit Control, we specialise in debt recover for small to medium sized businesses all over Australia, in all sorts of industries.
We have more than 50 years of collective experience and our team stays on top of the latest technologies and techniques to ensure we’re as robust and relevant as possible.
If you’re looking for affordable debt collection from a team you can trust in Australia, you’re looking for JMA.