The task of choosing a debt collection agency for a small business involves more than just maximizing the amount of debt collected and returned to you. It’s also about finding a partner that is ethical, transparent and able to help maintain a positive relationship with your clients.
In this blog, we’re focusing on how to choose a B2B debt collection agency that’s really good at getting debts paid while also being cost-effective, easy to work with, and has a strong reputation. We’ll walk you through the key things to think about, ensuring you make a choice that’s right for your business and fair for your customers.
Contact us to discuss about your case.
Questions to ask when choosing a debt collection agency for a small business
Understanding Debt Collection Agencies
International debt collection agencies, like Byrival, are specialized businesses focused on recovering unpaid debts. We operate as a professional entity dedicated to collecting debts on behalf of our clients.
In the European Union, where Byrival also operates, we comply with specific regional regulations and standards. These regulations may involve obtaining necessary certifications or adhering to local business conduct guidelines, ensuring our debt collection solicitors operate within the legal framework of each member state.
How Debt collection Agencies Work
Typically, a business will hire a debt collector to hand over debtor information to the B2B collection agency. The debt collection agency then puts its efforts into collecting the outstanding debt. Once collected, the agency returns the proceeds to the business, minus their service fee.
At Byrival, we generally operate on a “No Cure, No Pay” basis. This means our compensation is a percentage of the amount we successfully collect. This payment structure incentivizes us to maximize collection efforts, as our revenue is directly linked to the success of our debt recovery services.
In some cases, debt recovery agents may negotiate with debtors to settle for a reduced amount. As the original owner of the debt, your business has the option to agree to this reduced payment or reclaim the debt and continue pursuing it, especially if the debt collection agency is unsuccessful in its collection efforts.
Consider Total ROI, Not Just Initial Price
The fee percentage charged by a collection agency is one aspect of the decision. However, it’s crucial to consider the actual return on investment (ROI). An international debt collector that charges a lower fee but has a lower collection success rate may not be as beneficial as one with a higher fee but better recovery performance. A lower fee could lead to the agency focusing only on easily collectible debts, potentially neglecting harder-to-collect accounts. Assess the overall cash return to your business rather than just the fee rate.
Is the Agency Fully Compliant and Ethical?
Verify if the agency adheres to essential regulations like the Financial Conduct Authority (FCA) or equivalent bodies in the EU. Compliance ensures adherence to best practices and high service standards when the agency is delivering its commercial debt recovering services. Furthermore, GDPR compliance is critical for data protection, so ensure the agency has robust data handling and privacy policies.
Do They Have Adequate Insurance Coverage?
Insurance like third-party liability and professional indemnity is crucial. Confirm that the agency is sufficiently insured to handle any unforeseen circumstances.
What Does Their Track Record Reveal?
Investigate how long the overseas debt collection agency has been in business. A longer track record might indicate reliability and effectiveness. Examine their client portfolio and look for case studies or testimonials. Don’t rely solely on their website; check independent reviews and news features for a comprehensive view.
Prioritize Customer Service, Are They Easy to Work With?
Check if their call centers are domestic, as this can greatly impact customer satisfaction and collection outcomes. The agency’s approach should align with maintaining the integrity of your client relationships.
Seek a Partner, Not Just a Collector
Beyond debt collection, check if the agency offers additional services like proactive debt management or legal support. This can be particularly useful for complex cases. A good private debt collection agency should act as a partner to your business. They should collaborate with you to improve your internal accounts receivable management and offer additional services like conducting credit checks or implementing pre-collection measures. This partnership approach can significantly boost your bottom line.
How Do They Handle Debt Collection?
Outsource debt collection only to an agency that balances firmness with ethical practices. Their approach should be respectful of debtor vulnerabilities and adhere strictly to legal guidelines.
Do They Understand Your Industry?
The effectiveness of a debt collection agency for a small business can vary greatly depending on their experience in your specific industry. Look for agencies with a proven track record in your sector, as they will be more familiar with industry-specific challenges and compliance requirements. Seeking referrals and checking their client history can give you insights into their suitability for your business needs.
Are They Technologically Equipped?
In today’s digital world, technology plays a key role in effective debt collection services. Does the agency use advanced tracing resources and communication channels efficiently?
How Quickly Can They Start?
Finally, consider their availability. It’s important to choose an agency that can commence work promptly to address your debt recovery needs.
Why Choose Byrival?
At Byrival, we pride ourselves on meeting and exceeding the criteria essential for effective and ethical debt collection. Our approach to debt recovery is rooted in professionalism, where we combine ethical practices with efficiency. We understand the importance of maintaining your business’s integrity while recovering debts, which is why we adhere strictly to industry standards and legal compliance. Our team is equipped with extensive experience, ensuring that we can handle a variety of debt collection scenarios with the expertise and finesse they require.
Moreover, Byrival is at the forefront of technological advancements in the debt collection industry. We utilize the latest tools and software to enhance our services, offering you real-time updates and transparency in our processes. Our readiness to assist you immediately makes us a reliable partner in times of need. When you choose Byrival, you’re not just selecting a global debt collection agency; you’re choosing a partner committed to the financial health and success of your business. Let us take the burden of debt collection off your shoulders, allowing you to focus on growing and nurturing your business.
It can be challenging to terminate an agreement with an international collection agency, but it’s not impossible. Check your contract for any termination clause. If there isn’t one, consider negotiating directly with the debt collection agency. Look for clauses that allow termination upon payment of a fee or within a certain time frame, or in cases where the agency hasn’t met its obligations.
A material breach of contract by the collection agency, such as failing to fulfill key contract terms, could be grounds for termination. Fraudulent agreements also typically allow for contract annulment. In such situations, consulting a debt collection lawyer is advisable. Additionally, some agencies may disclose their cancellation fees upfront.
Pros: Outsourcing debt recovery to a debt collection agency for a small business can lead to successful debt recovery, take the burden off your shoulders, and utilize expert techniques like skip tracing. It’s also often more cost-effective than going to court.
Cons: There’s no guarantee of success, and it could potentially harm business relationships. Sometimes you won’t receive the full debt amount as agencies take a commission.
Yes, you can set up your own collections management system. This method can be faster, easier, and less expensive. It’s important, however, to familiarize yourself with debt collection laws to ensure you’re protecting yourself and your business.
Small claims court is a suitable option if the debt amount is small, and the debtor is local. The process is straightforward and cost-effective. Success depends on having competent debt collection solicitors and proper documentation to prove the work was completed or the product delivered. If the court rules in your favor, you’ll receive a judgment to enforce payment.
Selling the debt to accounts receivable factors is another option. These businesses buy debts outright, but you lose control over how they collect it. This option is typically more effective for businesses with multiple receivables needing quick cash. The cost is determined by the value and collectability of each debt.
Hiring an attorney is an alternative, especially for specific, challenging debts. However, attorneys might be hesitant to take on a case if a B2B collection agency has already attempted and failed. While attorneys do charge higher fees, a letter from an attorney can sometimes motivate a debtor.