How to Choose a Debt Recovery Firm
Getting a debt collector is a tough decision to make. A debt collector is someone who will buy your debt for peanuts. So you’re often losing profits in the deal… But at the same time, selling your debt to a collector means you’ve had enough of a certain client. And so you take the risk of damaging the relationship with said client. Nevertheless, it’s a decision that you’ve got to make. Not being repaid for your services damages your business’ financial position. This article will act as a walkthrough to selecting a debt collector. Below, we’ll provide you 4 tips to help you sift through multiple collection agencies.
(1) The 2 Different Types of Debt Collectors.
Debt collectors operate with 2 main strategies. The 1st type accepts only a high volume of accounts. Those tend to be large organization that buy the debt of other large organizations. The 2nd type is more local, and is happy to buy the debt of small enterprises. With the risk being higher, expect this type of collector to buy your debt for dirt cheap.
Large Organization or Small Business?
As a large organization, your choice is simple. Go for large debt collectors.
As a smaller business, your best bet is to go with collectors that deal with low volumes. This is because you’re likely to be rejected by larger debt collectors.
Look for Sector Specialists.
Some debt collectors specialize in collecting within certain industries and niches. For example, some debt collectors choose to operate in utilities. Others will operate only as credit card debt collectors, etc. Sector specialists work well with small businesses. They are better at collecting from individuals. And they have a deeper knowledge of laws concerning their specific industry. You see, a sector specialist understands the types of services you sell. They understand the contract and payment structures of your industry. Thus, they’ll have effective solutions for collecting in your industry, which is an advantage that many generalists lack.
(2) Look for an Established Collector.
And by established, we do not mean large. We simply mean that the collector should have a few years of experience under their belt.
The more experienced the debt collector, the better. And if possible, you should look for collectors with decades of experience in their field.
This ensures that they’re trustworthy. You don’t want a collector that scams for fees without providing a service.
Many collectors charge upfront fees for collection. This is a red flag to look out for. If a debt collector asks you to pay before they deliver the collected money, walk out the door. You won’t need their services, as there are many around that charge only after collection. Honest collectors that don’t ask for pre-payments advertise themselves as “No collection – no fee.” So that’s a term to look out for.
(3) The Collector should be Licensed and Regulated.
Any agency that does debt recovery in London should be registered with the “Financial Conduct Authority”
The best way to verify a collector is to ask for their FCA registration number. Then, check that against the registrations at the FCA’s website, ensuring that they’re authentic.
Needless to say, you should never deal with an unregistered collector.
You should also check organizations that the collector is associated with. For example, you can ask to see if they’re associated with the “Credit Services Association”
This association ensures that debt recovery in London follows ethical standards. It combats scams, and strives to build confidence in the collection market.
(4) After Finding a Collector – Ask for Clear Terms and Conditions.
Usually, this’ll be at the stage where you’re negotiating for contract terms. Read the terms and conditions and ensure clarity. Make sure that there are no hidden fees, as every dime you pay matters. Also, make sure that there are no upfront payments (like we mentioned previously). If you’re not sure how to proceed at the contracting phase –ask for a lawyer’s advice. Or, you can ask a trusted individual with experience in this field.
So Where Do I Find a Debt Collector for My Business?
Generally, you should start with recommendations. Trust matters the most with this business, and recommendations go a long way. Look for business partners, or friends with financial expertise. They should have a recommendation or two. But if you can’t find recommendations, then it’s time to search online. Start by typing “AR Legal Debt Collectors” in Google’s search bar. This should give you some highly efficient candidates in the debt collection business!