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Pros and Cons of Using Debt Collection Agencies to Avoid Bad Debts

Weigh both the pros and cons before hiring a debt collection agency in your area to recover the hefty amount of money that are owed to you.

Are your clients that owe lump sum amount of money to you in the long list, but you just cannot seem to get them to cancel a payment? Juggling debt recovery with compliance is often an irksome task yet a significant one. If you have been in debt for a long period of time, then at least once you have had an encounter with debt collection agencies. These are small third party collection agencies that proved long-term debt recovery to other businesses. According to Ernest and Young, debt collection agencies acting on the behalf of creditors have recovered round about $44.5 billion overdue accounts in post-commission debt in the year 2010.

There are several pros of giving the responsibility of chasing money to a debt collection agency but you should be well aware of the cons too. Below given are a few pros and cons-

4 Pros-

  • Free your clients to focus in other business ventures- Besides keeping you within the law, with debt collection agencies you can also free your employees to pay attention more on pressing business initiatives.
  • Saves both time and money- A debt agency manages the entire hassle-free process of successfully collecting the debts from your firm in a short span of time.
  • They have modern implements which you do not have- By using modern implements as well as advanced telephone technologies; a successful debt collector is in constant touch with debtors.
  • Help you recover more dollars in a more efficient way- While you will need to pay for the collections agency service to manage past due accounts, the return on investment is usually higher.

4 Cons-

  • Not totally free of cost- Debt collectors does cost hefty amount of money. Fees like- flat fees (pre-debt collection fees and fairly small in amount) and contingent fees are linked with debt collection agency services, depending on the number of debts they are able to recover for a business. Thus, even when your debt collection has been successfully done, you will not be able to recover the whole amount of your debt. The debt collection agency will get its portion from the monies they are in a position to collect.
  • May affect client relations- A debt collector who is very poor in communication skills may create an animosity between you and your clients by not dealing with charges in a courteous and diplomatic way. Souring that unique relationship which you have established with your clients could be potentially harmful to both you and your clients in the long-run.
  • Might spoil the reputation of your business- Word does travel fast when clients are not content with the business. Placing overdue accounts with a debt collection agency will cause worry and upset to malcontent clients. They may tell their loved ones about their experiences, which will tarnish your hard-earned reputation.
  • You have less control over their actions- This means that are fully dependent on the debt collectors while meeting the standards that you anticipate and not acting in a way that could tarnish your reputation among other clients.

If you want to hire one, always remember to choose a collection agency with an excellent reputation like us at Nelson, Cooper and Ortiz, LLCArticle Search, a top debt collection agency  located in Houston. Debt agencies with bad reputation can damage your own reputation as well as your wallet.

Source: Free Articles from


Jag Cruse a regular writer for debt collection agencies for many business and financial publications laid emphasis on the pros and cons on debt collection agency services to make hiring a debt collection agency an easier process for debtors.

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