As a business owner, you make your living by selling products or services to a wide variety of customers. In the course of conducting your business, it is likely that you will occasionally render service to customers who cannot pay up-front and therefore owe you a debt.
You might consider hiring a debt collection agency when customers go substantial periods of time without paying, though it is often preferable to instead pursue commercial collections through an experienced commercial collections attorney. You can make the best decision for your situation by understanding the major pitfalls of hiring a debt collection agency.
1. Customer relations may suffer
Your customers might have a negative perception toward debt collection agencies and may have adverse reactions to being a target of such an agency. Additionally, some collection agencies, and individual collectors, may lack empathy and treat your customers with indifference, which can reflect poorly on you.
2. Costs may vary
Working with a debt collector can sometimes be much more costly than pursuing equivalent legal action. Some agencies may even charge as much as 50% of the amount collected.
3. Collection agencies might be unsuccessful
Many debtors, especially those who consciously decide not to pay what they owe, are unwilling or less likely to cooperate with debt collection agencies especially if they know that debt collection agencies cannot commence legal action like an attorney can. Approaching the matter from the angle of exerting commercial collection law, however, may be more likely to yield a more favorable result from such customers especially if your attorney effectively communicates about your rights and intention to pursue collection of the debt through the legal process.
Though it goes without saying that you deserve to receive the payment that is due to you, working with a debt collection agency can sometimes be a gamble. Consider instead pursuing commercial collections through a method that utilizes the law to full effect.