Few businesses have an efficient collection process for payments from delinquent accounts, which is understandable because it’s unlikely they would be fully equipped with the necessary knowledge and tools.
Working with a third-party collection agency has several significant benefits, including the ability to improve cash flows by recovering more past-due accounts in less time and phone calls.
Third-Party Collections vs. In-house Collections
In a perfect world, all customers would pay their bills and invoices on time, all the time. As a Credit Professional, you know that the reality is much different. It’s not uncommon for customers to fall behind on invoices and to pay their bills late, if at all.
Late payments or non-payment can significantly impact a business’s cash flow and potential profit. Your in-house AR Team can handle paying customers but at some point, a third-party agency should be used to address slow and non-payment situations that don’t align with your payment plan.
Partnering with a third-party collection agency to handle debt collections provides your business with the expertise of a third-party agency and frees your AR Team to focus on paying customers.
Outsourcing to a third-party collections agency can be the most cost-effective and efficient method for managing your delinquent AR. Learn more about receivables management.
Benefits of Third-Party Collections
Hiring a third-party collection agency can help your business collect on unpaid debts while saving you time and money. Take a look at some of the benefits of third-party collections.
1. Reduce Staffing Costs
It can be expensive to maintain an in-house collections department that remains compliant with the Fair Debt Collection Practices Act (FDCPA). In-house debt collection requires spending money on additional employees, ongoing training and certifications, skip tracing databases, analytics software, up-to-date technology, and more. For most businesses, it’s far more cost-effective to work with a third-party debt collection agency that is singularly focused on implementing their collection strategy.
2. Collect More Debts in Less Time
Hospitals and banks don’t train their employees to work on landscaping; they hire professionals with the tools and expertise to handle the job. Unfortunately, businesses in many industries fail to take this approach with their accounts receivable.
Third-party collections agencies already have their own tools, methods, and databases to help them identify the accounts most likely to respond with payment to collect more debt in less time, all while remaining in compliance with the FDCPA.
External agencies can also use the data they’ve amassed to identify market trends that can help companies increase their cash flows.
3. More Effective Collection Strategies
Often, debtors take third-party debt collection agencies more seriously than in-house collections departments. Once an account goes to collections, it could lead to damaged credit or legal action. External agencies use innovative fair debt collection strategies that have proven effective in various cases.
4. Advanced Technology
Debt collection is the reason third-party collection agencies exist. It is their specialty. That means the third party collection agency is likely to have the most advanced technology available to streamline the process and lead to more collections.
5. Expert Advice and Legal Support
Some collection issues are tougher than others and might require legal action. A full-service third-party collection agency can handle the litigation process for you. As your partner in debt collection, the third-party collection agency can help you determine when legal action is the best path to take.
Recover Global Debts With Altus
Companies that work internationally face additional difficulties in recovering payments from delinquent clients based abroad. Debt collection agencies have the experts, resources, and solutions needed to collect debts in both domestic and global markets.
Regardless of your industry, Altus can help your company maximize its collections recovery while strengthening and streamlining its cash flow management system. Over the past few decades, we’ve collected over a billion dollars for our clients.