Ensure customers pay you on time
Advantages and disadvantages of using a debt collection agency
Before taking court action to collect debts, you could consider instructing a debt collection agency.
Advantages of using a debt collection agency
- Debt collection agencies have the time, expertise and resources required.
- Some agencies now offer a no collection no fee service.
- Debt collection can be a fast method of recovering debts so could save you time.
- If the debt collection agency is polite and professional, you may keep your customer - this is unlikely to be the case if you take legal action.
- The agency can instruct solicitors on your behalf if your customer still refuses to pay.
Disadvantages of using a debt collection agency
- Using a debt collection agency can be costly - the commission on the money recovered is typically 8 to 10 per cent for commercial debts.
- You may lose your customer if the agency has poor communication skills.
- If the agency takes a heavy-handed approach, your reputation may be damaged.
- Your business may not be a priority - you may be one of many businesses the agency works on behalf of.
- The agency may not use legally trained employees.