Is It Worth Paying A Collection Agency?
When your frustration has completely boiled to the surface with you debtor/s it may be time to call in a debt collection agency.
Typically once your invoice has reached 90 days the chances of recovering your debts becomes exponentially lower.
” Australian firms have improved payment terms for the first time in many months, with a drop of 2.6 days since the previous quarter reducing terms to an average of 54.8 days. However despite the improvement, business-to-business payments remain significantly above the standard 30 day term and there are warnings that a further blow-out in terms could be on the horizon.” – source Dun & Bradstreet (Australia) Pty Ltd (July 2009)
Long overdue collections can be handled through collection agencies. The fee charged by these agencies varies widely. While some charge a flat fee that includes all charges like court fees, attorney fees etc., some charge their fee based on number of accounts they need to collect from, the number of days for which the payments are due and the value of collections.
If you do decide to hire a collection agency, remember that there is a possibility that the agency may end up collecting the money, but inform you that it could not be collected. Following this, you might not make any attempt to follow up, and not even know that the amount was actually collected. Therefore, it is important to choose a collection agency that is reputable and belongs to industry associations whose regulations it has to adhere to.
Once you choose the agency you will need to negotiate the fee. You will need to decide whether to place all your accounts with one agency, or distribute them between several agencies. Each has its own advantages and shortcomings.