Unpaid invoices are a huge headache for businesses. Small and medium-size businesses are most affected by a delay in payments. According to a report from Sage, they suffer a loss of 3 trillion USD on a global scale.
10% of all payments are never paid and the businesses are forced to write them off as bad debts. Thus, a proper debt collection mechanism is very important if you want your business to survive.
Despite its necessity, there are a number of myths regarding the process of international debt collection that is so widely believed that people have perceived them as truths. Let’s discuss some of them in detail and find out the actual truth –
It is an expensive process
Many businesses have the idea that debt collection is for large corporations. But hiring debt collectors also benefits smaller corporations greatly.
Debt collection agencies work on a success-only basis. You are supposed to pay them a part of the amount they recover. In case they fail to collect the debt, you do not have to pay them at all.
Trust me, paying a debt collection agency a part of the amount is a whole lot cheaper than not getting paid at all.
It ruins relations with the customers
Instead, a debt collector comprehends the immense importance of customer relationships. They understand that businesses are built upon these very relationships. Thus, they will be extremely careful while dealing with the debtors in order to maintain your brand name.
Most debt collectors tend to professionally mediate the payment process. They educate the defaulters about how the non-payment of dues is adversely affecting your business. Therefore, your relationship with the customer remains intact. However, they are also entitled to take legal actions against debtors who refuse to pay, continuously.
Debt collection agency shouldn’t be used unless the invoices are very delinquent
Most small corporations have this idea that debt collection agencies pay no heed to collect smaller amounts. While there are certain agencies that like to prefer a collection of larger amounts, many agencies specialize in the collection of smaller debts.
Do not wait for your debts to pile up to become a massive amount. Going to a debt collector as early as possible increases your chances of getting paid. A delay of thirty days in payment is much more likely to get you your money back than ninety days delay.
A solicitor is more effective than debt collectors
Although there is an option of taking the legal course, it is quite expensive and time-consuming. In some cases, you will probably end up spending more on lawyers than what the actual debt was.
Hiring a good debt collector will ensure that you receive your dues before it reaches to the point of taking legal action. This will significantly reduce your expenditure and stress. However, in certain cases, you will have no other option than to take the legal course. Although, debt collectors can avail their support in the legal actions also.
It will damage the brand name
You need to find a debt collector that respects your brand as much as you do. Hire agencies that are reputable and efficient. Once you hire such a collector, there will be no need for you to worry about them ruining your brand’s name.
It will be better if you introduce the debt collector to your regular credit control process. This will ensure that the debt collector complements your in-house debt collection process and also put pressure on your clients to get you paid sooner.
You cannot be paid after the statute of limitations
The statute of limitations is a period until the debt is legally enforceable. It is decided upon by both parties at the time of conducting business.
You will not be able to sue the defaulter for the interest on the debt after this period expires, but you can still get the amount that is due. Do not hesitate to approach an agency after the statute expires.
Debt collection is an essential part of every business. When going through the process, make sure that all your information is from reliable sources.