The Hidden Costs of using a CHEAP
collection agency for commercial debt collection
"The only thing more expensive than hiring an expert - is hiring an amateur" - Red Adair
After 20 years in commercial collections it
is always amazing to observe companies who base their choice for a collection
agency, solely on cost. With the present economy I understand and sympathize.
What I don’t understand is why companies take the cheap route and are then
surprised by the lack of tangible results.
Reputable companies that make decisions
based strictly on the lowest bid don’t realize, or choose to
ignore, the risk to their reputation and potential financial liability. The
reason many collection agencies offer CHEAP rates is because they cut corners.
This is especially true with commercial debt collection.
When considering a collection agency to
collect your commercial debt consider what happens when an agency cuts corners,
BEFORE making a decision solely based on the cheapest rate.
CHEAP
collection agencies have cheap staff. The main reason cheap
collection agencies always have lower recovery rates are because their staff
lacks proper training and commercial knowledge. The modus operandi of these
cheap agencies is to try and blindly collect commercial accounts using consumer
collection tools and tactics.
Commercial debt collection
requires the highest skill level and experience in the collection industry.
It takes years to learn the intricacies of commercial credit. Professional
commercial collectors with this type of experience don’t come cheap. The end
result with a cheap agency is their cheap rates deliver a lower return compared
to a professional commercial agency with higher rates.
CHEAP staff make stupid
mistakes. Commercial debt collection is a specialized field and a
consumer collector is prone to leaving money on the table, because they lack
knowledge. The big problem here from a Client perspective is mistakes come with
a cost. Big mistakes can also have big liabilities attached.
A collector, who enters the commercial
collection arena, without being armed by training and knowledge, is like a fool
walking with your reputation though a field of liability landmines.
Professional commercial collectors avoid land mines and protect your
reputation.
CHEAP collection agencies fly
blind when they try and collect. Commercial accounts usually require
more intensive research than consumer. Cheap agencies with cheap rates can’t
afford to properly research a commercial debtor company. Even though an account
may be tens of thousands of dollars they will cut corners and just fly blind
into a collection.
A professional information infrastructure
is very expensive to set up and maintain. Cheap rates mean no margin for a
proper commercial information infrastructure. It is the customer who actually
suffers from a poor infrastructure with low recovery rates.
Experience
is everything. Often, a professional commercial collector with 10 or
20 years’ experience can accomplish more in one phone call, than an amateur in
10 calls. Commercial debtors are more debt savvy than consumer debtors and
commercial collections have more loopholes. A professional knows how to close
the loopholes and get paid.
Experience knows the local business landscape
and the applicable laws in each Province or State. A professional knows what
levers to use for prompt payment.
CHEAP agencies don’t come with any
Perks. A professional commercial collection agency offers valuable
advice while a cheap agency remains silent. Frequently for example, a
commercial collector will run across a faulty credit agreement. While the cheap
agency doesn’t even recognize the problem the professional agency will suggest
some minor changes that reduce future risk.
These are just some of the ricochet effects
when cheap agencies venture into the commercial debt collection arena. You get
what you pay for and choosing a commercial collection agency is no exception.
This is why so many companies use PCR for commercial collections. Protecting
our Clients from the stupidity above is part of how WE PROTECT
YOUR CORPORATE HEARTBEAT.
