Debt collections outsourcing: a no-risk solution to unpaid client invoices

Virtually no business is immune to unpaid invoices and the stressful and time-consuming task of debt collection. For many, it becomes just too hard to chase down debtors, and the fear of a legal process is equally daunting. Savvy businesses know that there is another option: outsourcing to a collections consultancy and recovery service, which takes away the headache and operates on a performance basis.

When outsourcing debt collection, make sure you engage a company that can reference years of experience and a track record of results. After an initial free consultation, whether it be over the phone or face-to-face, a consultant can discuss a sensible, cost effective solution to the specific problem you are facing.  Debt collection is a highly competitive market, which makes it possible to cherry-pick a no win/no fee service provider, removing the risk for your business. As a point of difference, also assess the frequency with which collected funds are transferred to your operating account – some providers work on weekly transfers or better.

While simply “getting the money back” is usually the top priority, also consider your brand and how the collection process will impact it. A little due diligence on the collections provider and their network will go a long way to protecting this valuable asset.

Professional and full service consultancies can assist you with the entire receivables process. This process takes you from new account documentation and set-up, through billing and payment structuring, credit claim resolution, monitoring existing clients and acting in a timely way when payment is late ensuring you get repaid sooner. Similarly, full service consultancies utilise the latest innovative cloud-based and compliant technologies so that you are enabled to monitor progress 24/7.

There will be times when even the most advanced collection consultancies fail to resolve a client matter. In these circumstances, ensure the consultants have ready access to an experienced and commercial legal practice. The intent here is to balance the costs and risks with the benefits of formal recovery procedures.

Finally, questioning the provider’s range of business solutions, successful case studies and the breadth of their industry knowledge all go a long way in providing comfort that you are in safe hands.

To recap, the key 10 steps to consider in outsourcing collections and recoveries are:

1. Time is of the essence so act now to minimise stress and protect cash flow
2. Use experienced practitioners
3. Take advantage of a free initial consultation
4. Remove risk by engaging a provider on a “no win/no fee” basis
5. Insist that collected funds are transferred back to you frequently – ideally each week or better.
6. Pay attention to brand management  
7. Look for a full-service practice to support the end-to-end Accounts Receivable process
8. Ask for access to the provider’s cloud-based system to monitor compliance and progress 24×7
9. Ensure ready access to a commercial legal practice
10. Breadth of industry knowledge and track record value

No matter whether your business is small, medium or large, cash flow is king and there is no need to put unpaid debt in the too hard basket.

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Last updated on: March 18, 2022