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Trying to collect dues on time and failing in the attempts is a part and parcel of every business house. And if you own a start-up, it can get quite frustrating because of the decrease in cash-flow. Plus, you have to take care of so many things. Unlike the MNCs, start-ups have restricted cash flow and hence creating a whole new department for this particular task can be quite difficult. So, now you must be wondering what is the solution? Well, if you have failed even after a lot of effort and follow-ups to collect dues from customers, you should definitely think about considering professional help. And there are two kinds of options to choose from: legal attorney and commercial collection agencies.
As a law intern, I would suggest you settle for collection agency services. And there are various reasons behind it, which I would explain in this blog. Take a look.
- Methodological and less strict approach – Collection agency service is generally chosen because of their methodological approach which includes specialized phone calls, letters, e-mails, face to face encounters as well as usage of other software in the process of collecting receivables. Attorneys generally take much more strict actions, which can ruin the prospect of future business opportunities with the debtors.
- No negative image or clash with the customers – Although customers tend to pay on time through any kind of approach, but there is a negative image in the market about the attorneys because of the legal actions which are taken against customers or debtors.
- They collect fees on a contingency basis – The best part about a reputed agency is that they work on a contingency basis. Their fee is generally a particular percentage on the total amount of money recovered. So, you do not need to pay until and unless your amount is recovered and credited. In order to get back bad money, you do not need to spend good money, without any results achieved. Whereas, attorneys charge upfront money as well as charge fees on an hourly basis, which can be highly expensive. And there is no guarantee that you would win the case.
- No court dates involved – Also, debt collection agencies generally recover your receivables quicker as there is no court date involved. We all know that the entire procedure gets complicated as well as delayed when the court is involved. Whereas, working with attorneys mean the entire process will be done via court.
- Not risking the company’s reputation – The attorneys generally file a lawsuit against the debtors, and if you lose, your company’s goodwill is at stake. Why risk the hard-earned reputation? Instead, opt for commercial collection agency services.
So, it is always recommended that you settle for business collection agencies. But you do need to research a bit so that you can find out the best in the market. Wondering how? Take a look.
- Check all the credentials of a company like insurance, license and bond. Also, ask them to provide you with their certificates and achievements. If a company fails to provide you with all these, then it is better not to settle for that company.
- Check if the agency has sufficient experience in collecting dues from customers in a similar kind of industry as yours. An agency having years of experience in a completely different sector of trade wouldn’t be beneficial for your company.
- Check if the online reviews are positive or not. The more you will research, the more customer feedbacks you will get to read. Be sure of an agency before actually hiring them and giving them the responsibility to recover the debts of your company.
So, choose a commercial collection agency after adequate research, and do not opt for attorneys because of the above-mentioned reasons.
Author Bio: Charlotte Smith is a law intern and here, she writes why you should choose collection agency services over attorneys in order to collect receivables. Read her articles to know the benefits of collection agency service.