With well over 300 Debt Collection Agencies operating within the United Kingdom alone, companies and individuals have a tough decision to make in today’s modern business climate as to which company will best serve their requirements.
This should naturally be coupled with an assumption that any Debt Collection Agency will be solvent and conduct their practices in a ethical and professional manner.
Choosing the wrong Debt Collection Agency can be far worse than choosing none at all, which anybody working within the industry will totally understand but for a layman, what does this mean exactly?
We quite often receive requests for Debt Recovery recommendations for particular industries such as maritime, specialist insurances, private school fees etc and therefore thought it prudent to put together this article.
Now whilst we cannot recommend any particular company, we can provide is a basic tick list for businesses across the UK to use before instructing what is essentially going to be an extension of their business.
1. Ensure that the Debt Collection Agency is bona fide
You would be amazed how many people do not carry out full checks on who they do business with. With hundreds of websites on the internet claiming to be ‘Debt Collectors’, the basic due diligence is required to complete this task.
In addition, more often than not they will be a Limited company.
2. Ensure they have adequate licences and authorisations.
A bona fide Debt Collection firm will have their licenses clearly displayed on their website. Usually by Financial Conduct Authority and they will also hold a data protection licence.
In the case of Law firms with ‘debt collection’ divisions, they will be regulated by the Solicitors Regulation Authority
3. Does the Agency have experience of your industry?
Using a Debt Collection Agency that has no knowledge of your industry can be catastrophic! You would not employ a member of staff for a key position that had no experience of your industry so why a Debt Collection Agency?!
It is a simple fact that the success rate is maximised when using a professional Debt Collection Company that has a working knowledge of your industry and is proficient in the type of accounts they are recovering.
4. Understand the terms and conditions
What will you pay upon a successful recovery? Be very clear about what the charges are. We received notice of a scenario only last month where a Debt Collection Company deducted nearly 80% of the initial sum they were instructed to recover due to ‘disbursements’ in addition to the agreed commission rate.
Some companies operate drip pricing policies and hidden costs! always make sure you fully understand the terms of your engagement. A bona fide Debt Collection Company will always operate a transparent costs policy.
5. Know what kind of service you will receive.
There are different levels of service one can expect as with all types of industry. It all comes down to the expectation of the service user and indeed, the service levels employed by the Debt Collection Agency.
In terms of reporting, some offer a on-line reporting system and some provide monthly reports. So will not provide anything, simply advising they will tell you if they have collected it or not after a certain period of time.
You should have a point of contact for any queries also however some will not offer such.
6. Credit check the service provider
Whilst is is imperative that all Debt Collection Agencies should have a ring fenced account for their client’s monies, it always pays to credit check any potential supplier.
A number of Debt Collection Agencies have gone into liquidation over the last 6 months alone with their clients losing thousands in fees paid and debts collected
7. Is cheapest the best option?
In short…… No! For example, you would not book a flight with a low budget airline but then get the service of British Airways.
We have heard alarming stories of some no win – no fee debt collection agencies being extremely overzealous and aggressive in their attempts to collect debts. This not only damages the reputation of the instructing party but can also prove to be a liability for the instructing party in the eyes of the law.
We spoke to Tony Smith at Debt Collection referral & comparison site Best4DebtCollection.co.uk “We regularly receive enquiries from companies who have bad experiences in the past with rogue debt collection agencies. From not passing collected monies on to inflating charges when monies are passed on.”
He continues “It pays to do your research or alternatively use a company like ours as they can assist third parties by providing a tailored quotation for them from approved Debt Collection companies”