5 Myths about debt collection that you need to stop believing now

Most businesses that write-off their debt can save their cash flow, and recover their outstanding amount, if only they agreed to hire a debt collection agency. A debt collector has immense knowledge and techniques to their advantage that helps them in recovering the debt successfully.

But some businesses don’t believe in hiring a debt collector because they believe the old age rumors about a collection agency. Myths like they are aggressive and abusive (not all collectors are, some dishonest collectors have to lead to this myth), and so on. That is why in this blog, we will try to bust these myths.

Myth 1: Debt collection is an expensive process

The reality is that most debt collection agency works on a commission model. They only take a 25%-45% commission from the amount that they have recovered. And if they don’t recover the debt, they don’t take money for it. It is pretty affordable and profitable as compared to you writing the debt-off. Writing off a receivable will probably cost you more loss.

Myth 2: Only big enterprises hire a debt collector

It is completely untrue. A lot of small business owners and startups hire a debt collector too. They help them recover the debt, which leads to increased cash flow. A small business owner has so many responsibilities and limited time and resources. Thus, hiring a third party collector who knows how to collect the outstanding amount is a better option for them.

Myth 3: Going for legal action is better than hiring a collector

Taking legal action against your customers should be the last resort you ever take. It is because it is a time-consuming and expensive process. Also, it can damage your relationship with the customer. Instead, go for a collector as they can help convince the customer to pay without damaging your relationship with them.

Myth 4: My customers won’t prefer their debt in collection

Yes, your customers won’t like that they have debt in collection, but it is only because they refused to pay. Till, you are working within the laws, and work with a collector who understands that maintaining a relationship with your customers is important for you, sending a debt for collection is not wrong. A customer will not like it, but they will understand, especially if the collector helps them pay the debt easily.

Myth 5: Debt collection agencies are best for old debts only

Not true, when debt gets old, it becomes hard to collect it. That is why as soon as your customer goes beyond 90 or 180 days without paying the debt, you should hire a collector. It will help you save time and resources and the percentage of recovering the debt successfully and quickly increases too.

Now that your myths about debt collections are burst, why not hire a reputable collection agency like Cedar Financial to solve your debt problems. Visit their website to know more about their process and hire them.