Introduction
If you've never hired a debt collection firm before, you could have a lot of misconceptions or questions about what they perform. Debt collection firms have a bad reputation, owing to the numerous fallacies surrounding debt collecting. Many businesses are hesitant to hire debt collection services to assist them collect on past-due bills because they believe it will hurt their bottom line. Using a debt collection firm, on the other hand, can be quite useful for small businesses because it allows you to focus on your business while someone else handles debt collection. The following are the six most common debt collecting myths, as well as the facts:
1. Large firms are the only ones who use debt collecting agencies.
Thousands of small businesses benefit from outsourced debt collection services every year, despite the fact that large organisations routinely use debt collection firms. A debt collection service can assist your company in recovering debts ranging from a few hundred dollars to tens of thousands of dollars. Debt collection services are familiar with the regulations governing debt collection and can assist you in collecting your debts more quickly.
2. Debt collectors have the right to contact anybody at any time.
The Fair Debt Collection Practices Act governs debt collection companies and specifies when they are legally permitted to contact a debtor about their debt. Debt collectors are not allowed to phone someone before 8 a.m. or after 9 p.m., according to the FDCPA. Furthermore, if a debtor begs that they not be called at work, a debt collector must respect that request. Visit the Federal Trade Commission's website to learn more about collecting laws and regulations.
3. If a customer does not pay, they will be prosecuted.
If your clients don't pay their debts, they won't go to jail. Anyone who threatens a customer with criminal charges or jail time is against the law. If someone does not pay their obligation, there is a procedure that they must follow, but going to jail is not one of them.
4. Debt collectors are costly.
Although each collection agency has its own payment system, the majority of their revenue comes from commissions on the debts they collect from your clients. You'll only pay an agency if they collect the debt, and their fee is a modest percentage of the total amount recovered. This means that the majority of the funds will remain in your company's hands. Even if you pay a debt collection agency, it's still cheaper than not getting paid at all.
5. If I engage a debt collection firm, I'll lose consumers.
Using a reputable debt collection service should never be costly to your business, and it should never be detrimental to your company's reputation. The majority of customers are aware that if they do not pay their bills on time, they will be subjected to the collection process. It's critical to work with a debt collecting service that operates legally and ethically. Businesses lose consumers only when they use a debt collecting firm that breaks the law and harasses their clients. Doing your homework before selecting a debt collection firm will help you select a reliable debt collection agency that will adhere to the Fair Debt Collection Practices Act's guidelines.
6. I shouldn't hire a debt collector unless my invoices are beyond due.
The truth is that the sooner you report a debt to a third-party debt collector, the better your chances of getting it paid. Debts reported to collection agencies when they are 30 days or more past due have a much higher chance of being collected than debts referred when they are 90 days or more past due.
Are you looking for a debt collection service to help your company? MNS Credit Management Group is your one-stop shop for all of your credit management needs.
