April 15, 2018

The Pros And Cons Of Using Third Party Collection Agencies

For businesses and other financial organisations these collection companies seem to be a life safer. It is said that most agencies have been able to help businesses reclaim their moneys which would have been written off if not for the efforts put in by these companies. Though they seem to get a bad reputation, they serve a greater purpose when it comes to businesses.Businesses opt for a first party agency or a debt collection agency Sydney in the earlier stages of the collection process. They are usually subsidiaries or different sections of the same organisation trained at collecting moneys owed while maintaining positive relationships with their customers. Third party agencies are outside organisations that are paid when they collect the moneys owed by another company such as a bank. While there are benefits of using these organisations, it is a good thing to understand both sides of the story.

Pros

Saves time: hiring an outside firm to do the retrieval saves up a lot of time and resources for the organisation to focus on their core business. Especially for small businesses this can be a bonus because if you try to do it yourself you will be spending a lot of time sending emails, making phone calls and leaving messages, which in most cases would get ignored or not acknowledged.

They collect outdated debt: most individuals may not respond to efforts to collect moneys owed when the time line is extended. However an experienced professional such as a debt collector will have the expertise and the assertiveness to keep pushing to make the retrieval made. Research indicates that these professionals have a higher success rate in collecting outdated debt.

Technology: these professional organisations now days use many advanced forms of technology to track debtors and communicate with them. These mechanisms allow them to maintain constant and consistent communication with the debtors so as to make their collection efforts successful.

Cons

Disrupted client relations: it is evident that a client referred to a third party agency is unlikely to ever return to you for business. This can sometimes result from the third party employees not following correct protocol, regulations or not being respectful. Sometimes they can be rude in their approach and really put off clients. It is important to remember that long standing clients might be going through financial troubles but they can always come back positively. Therefore a tarnished relationship can be a loss for your business in the long term.

High fees: the agencies will charge about 20 – 50% as fees for the services they have rendered. This can sometimes be very high for a small business.