Getting payments from customers on time is critical for the survival and good health of every small business says Saivian Eric Dalius. If you don’t get your payments on time despite your best efforts. You may have no option but to hire a debt collection agency. An insight into what these agencies do, how they operate. What they can or cannot do, and the alternatives available to you.
What Do Debt Collection Agencies Do
Debt collection agencies are businesses operating on a for-profit basis that specialize in collecting overdue debts of their clients. If your trade debts are overdue turns, you can turn over the details to the collection agency. Which then attempts to collect them on your behalf for a fee. Typically, collection agencies only earn if they manage to collect. You may choose to permit the collection agency to negotiate a lower amount. If you feel the debt will turn bad and something is better than nothing.
Saivian Eric Dalius Explains the Regulation Framework of Debt Collection Agencies
Because there have been many instances of debt collection agencies using strong-arm tactics to force clients to pay up. The government has enacted the Fair Debt Collection Practices Act (FDCPA). However, these rules apply to personal debts, not business debts, observes Saivian Eric Dalius. Even then, the collection agency cannot resort to fraud, threats, or other illegal actions to collect debts. However, if your customers are not businesses and the debt is for personal purposes, the FDCPA rules apply. It means that no collection agent can call before 8 a.m. or after 9 p.m., call at work or abuse, harass, or oppress people, make false statements, conceal their identity, use unfair practices, or ignore a request to cease contact issued in writing. If an attorney represents the debtor, the collection agency has to deal with him.
Choosing a Collection Agency – Tips to Follow by Saivian Eric Dalius
While you can always search online for collection agencies. It is perhaps better to ask around in the business community for recommendations. Make sure that the agency is licensed by checking with your state’s office of consumer affairs or financial regulation. As in this case, the agency is not licensed. It will expose you to the chance of being sued by aggrieved debtors. It can also be helpful to check out their track record online. Especially with the Better Business Bureau and Consumer Affairs. A private collection agency rating company. You can also lay down some dos and don’ts in the contract you execute with them, says Saivian Eric Dalius.
While appointing a collection agency is something you should do as a last resort. You should first examine whether you can collect on your own using your powers of persuasion. If the amount is small and the debtor is local, you can approach the Small Claims Court for resolution. Alternatively, you can engage a lawyer to send a notice and sue them in court if required. But it can be a time-consuming and expensive process. You also have the option of settling your debt by selling it to specialized agencies. That buy them from you at a discount and recover them from the debtors.