Photo from Unsplash
Originally Posted On: https://bippermedia.com/baltimore-small-business-collection-agency-when-should-i-hire-one/
In 2020, more than one-third of consumers fell behind on at least one debt payment they owed. As a result, creditors and debt collectors contacted these individuals to ask for their payments.
As a business owner, you might realize this fact first-hand. You might have customers and clients that haven’t paid you and won’t pay you.
Unfortunately, uncollected debts reduce your bottom line by cutting into your profits, yet collecting debts isn’t always an easy task. So, what can you do about this problem? One of the best solutions is to hire a small business collection agency.
If you own a business in the Baltimore area, a collection agency can work wonders. Here is a guide that explains what a collection agency can do for you, why you need one, and how to tell if this is the right solution.
How a Small Business Collection Agency Works
A small business collection agency is a firm that assists business owners with their collections.
Anytime a person doesn’t pay a debt on time, the business’s cash flow suffers. And after all, businesses need a positive cash flow to survive.
Small business owners seek services from collection agencies to alleviate this problem. So, what does a collection agency do? Here are some of the key things to expect.
They Contact the Debtors
The first step is collecting the information about the business’s debtors. You give the collection agency a list of all the past-due debts. You must also supply them with the amounts owed, names, phone numbers, and addresses.
Once they have this information, they’ll begin contacting them.
They Use Methods to Encourage Debtors to Pay
Collection agencies contact people via phone, email, text, and mail. Each time they contact a debtor, they encourage them to pay their debt. In addition, they give due dates and consequences according to the law.
They Collect the Money Owed
A collection agency will collect some of the money owed to a business at some point. They might do this through mail payments they receive or online payments.
They Pass the Money to the Businesses
Finally, the money is passed to the businesses who asked for it. A collection agency keeps part of the money collected, as this is the fee they earn from their services.
You can research collection agency services to learn more about how this works if you have further questions.
Signs You Need to Hire a Collection Agency
How do you know if your company needs a collection agency for small businesses? Well, there are several signs:
Past-Due Amounts
First, how many past-due debts do people owe you? If you’re uncertain about the amount, you might want to start running aging accounts receivable reports. These reports list every amount owed with the due dates.
You probably don’t need a collection agency if all your customers are current on their balances. What about balances that are 30, 60, or 120 days past due? Can you collect these amounts?
It seems that debts become more challenging to collect the older they get.
When a customer misses the due date, they might miss another due date. After a certain point, the customer might have no intentions of paying the bill.
Manpower and Abilities
The second thing to consider is your ability to focus on collecting past-due balances. Does your company have the manpower to do this job? Do you have the resources, knowledge, and time for it?
Collecting debts from customers who don’t want to pay isn’t easy. Instead, it’s challenging and time-consuming. Plus, it’s important to follow the laws with the methods and tactics you use for collecting debts.
Benefits of Hiring a Collection Agency
If you have aging debts that you want to collect and need assistance collecting them, you might want to turn to a small business debt collection agency. Here are several benefits of hiring this out.
You Save Time
When you hire a company to do a job, you save time. You won’t have to worry about collecting debts yourself. Instead, you turn them over to the collection agency, and they take it from there.
You can use your extra time to focus on building your company by increasing sales or generating new leads.
You Collect More Money
Secondly, you collect more money. If you ignore old debts and never attempt to collect them, you likely won’t collect them. A collection agency might not collect 100% of what people owe you, but they’ll collect some of the money.
You Learn Better Collection Techniques
Working with a collection company offers a way to learn better collection techniques. You can speak with an agent to ask questions about your methods and options for improving your collection efforts.
How to Choose the Right Company
After reading this article, you might be convinced that you should hire a Baltimore collection agency for help. However, once you decide to do this, you’ll need to find the right company.
Here are a couple of factors to consider as you decide.
The Company’s Experience and Reputation
As you begin searching for a company to hire, you’ll want to spend time evaluating the company’s experience and reputation. You can check out their website to learn more about their services and experience.
You can also read reviews and talk to other business owners before hiring a collection company.
The Recovery Rate
Next, consider the company’s recovery rate. For example, First Federal Credit Control (FFCC) is a company with a track record of success. They average a 42% recovery rate with their services.
The recovery rate refers to how much money a collection agency collects for a business.
Get the Help You Need for Uncollectible Accounts
Ignoring uncollectible accounts won’t generate cash flow, but hiring a small business collection agency will. Collection agencies know the law and the best techniques to collect debts that people owe.
Are you ready to learn more about our collection services?
If you operate a business in the Baltimore area, check out First Federal Credit Control. We offer collection services for most industries and can help you generate more cash flow for your business.
First Federal Credit Control
1761 W Hillsboro Blvd #320
Deerfield Beach, FL 33442
(800) 486-5500
https://ffcc.com/
