COVID has had a significant impact on the UK economy, with reports showing sales at 17% below what they should have been in Q3 2020. Employment also took an 8% hit, and there was a 24% reduction in investment.
The economy had a slightly better 2021 but 2020 created a dip in the finances that is proving difficult to reverse. Plus, the pandemic is still throwing curveballs, and businesses are not seeing the numbers they need to put them back in the black.
More and more invoices are heading into overdue territory, and SMEs struggle to find the time and resources to collect. Unfortunately, debt collection is one of those unpleasant but necessary tasks critical to a healthy bottom line.
Many businesses are turning to trusted debt collectors to take on some of the administrative load of chasing up overdue finances to protect their cash flow.
Use these tips to take the stress out of searching for names for debt collectors who can deliver results like fewer outstanding invoices and more cash in the bank.
What Do Debt Collectors Do?
Business owners have a lot on their plate. It’s challenging enough to be in business without worrying about unpleasant conversations related to outstanding payments.
Trusted debt collectors provide a valuable service to business owners in recovering outstanding invoices. Most collection agencies will work on percentages, which means they will take a small cut of what is owed to a business in return for taking over the collection of outstanding financials.
Another popular model for debt collection agencies to work from is for the agency to ‘buy’ your outstanding debts by paying you a slightly lesser amount for the total due.
If you have a particularly troublesome client with a large outstanding amount, your best bet may be to use an agency that provides a debt collection no win no fee service. Debt collectors who offer no win no fee policies are very good at what they do, so there’s an excellent chance of success. However, you won’t be further out of pocket should things not work out.
Finding Trusted Debt Collectors
Finding a collection agency you can rely on isn’t always easy. However, you can make the job of finding names for debt collectors a little easier by setting a few guidelines before you begin your search.
Start with Research
Debt collectors often specialize in the type of work they do. For example, some will have experts who can work at collecting significant sums from large corporations. In contrast, others will specialize in dealing with smaller operations that may require a lighter touch. During your search for trusted names in debt collectors, find out what sort of work they specialize in first before setting up an appointment.
Can They Use Skip Tracing?
Unfortunately, there will always be debtors who think it’s a better option to skip town and disappear into the night rather than pay their bills. If your business is in this predicament, you will need to work with debt collectors who offer a skip tracing service.
Skip tracing gives debt collectors access to technology that helps them locate debtors who have not provided a forwarding address.
A skip tracing service uses the internet to scour and analyze reams of data such as credit cards, credit reports, loan applications, and air travel records to locate a target and start the collection process.
You may need a skip tracing capable service if you have routinely tried to connect with a debtor without success.
Trusted Debt Collectors will have Insurance
While trusted debt collectors must operate within the confines of the law, there is always the chance you could team up with one that can get too enthusiastic and aggressive in its debt collection measures. Should your client feel as if they were unjustly treated, they could sue and take you both to court.
Always ensure you are protected against litigation by checking the agency’s insurance levels. It’s often referred to as “Errors and Omissions Insurance” and held by trusted debt collectors as an extra layer of protection against legal action.
Check the Debt Collector’s Legitimacy
Debt collectors have to abide by the debt collection regulations. The Financial Conduct Authority is the regulatory body for debt collectors in the UK, so check they are registered here and are licensed. Trusted debt collectors will also be members of a trade body like the Credit Services Association.
Read Their Reviews
Reviews are a fantastic resource for discovering some of the most respected names for debt collectors. Most will publish testimonials on their websites but don’t neglect other resources like TrustPilot. Google will also list reviews alongside a company name search, so check out as many different review sources as you can.
Compare Costs
When you have your shortlist of names for trusted debt collectors which look like they might be a good fit for your business, it’s time to compare fees and contingency costs.
The methods by which agencies charge their clients will differ between agencies, so finding one that can work with your budget is critical. In general, there are two main fee structures used by debt collectors; contingency and flat fee.
Contingency: Otherwise advertised as debt collection no win no fee payment models. Contingency payment plans are not that popular in the UK, but if you look hard enough, you will find trusted debt collectors who offer them.
Flat Fee: The flat fee is usually charged pre-collection and is a relatively small sum to cover the agency’s costs.
Remember, collection agencies have operating costs, which means they will receive a portion of the outstanding financials in return for their service.
When you struggle to recover outstanding invoices, a debt collection agency is often the most economical solution. Instead of spending hours on fruitless phone calls, let your trusted debt collection agency do the heavy lifting for you while you continue to look after your paying customers and grow your business.
Do you need help with debt collection? Our services might interest you! Contact us and enjoy the benefits of a good debt collection agency.