It is good to look for
alternative ways to collect debt from your customers. However, if all other
avenues have failed, you may have to use debt collectors to get your cash.
Every agency is different from the other and not every one that is right for
your kind of business. Here are a few things to consider.
Some debt collectors Sydney
specialize in dealing with large businesses while others deal with small
businesses and households. Check in your locality for the collectors that
target similar clients like the one that has defaulted. The method the agencies
apply has a high likelihood of succeeding in your case.
Every state has its own
regulations that cover how debt collection is done and how the agencies work.
It is important to ensure that you select a firm that adheres to Consumer
Protection or Collection Practices legislation. Moreover, the firm must be
licensed to work in the field of debt
recovery in Australia.
Once you have a list of a few
companies, take time to compare their costs. Different agencies use different
formulas to come up with their rates. Some charge a small flat rate mostly
associated with pre-collection activities. You are then charged a contingency
fee that is part of the amount collected. The charge is about 20% to 30% of the
amount collected. Pick a company that offers a no collection a fee model.
When comparing costs, ask about
their operating model, e.g. do they use personal contact with debtors
extensively to avoid legal action other than as a last resort? Debt collectors in Australia that use this
model can be much less expensive because legal fees and delays are reduced and
debts are collected more quickly. Also
check how much they charge for incidentals, e.g. phone calls, letters of demand
etc. Some debt collectors in Australia charge high fees for these items while
others provide them free of charge.
Some debtors tend to run away
with your cash and ignore your calls. Some even skip town. If this is your
situation, ask if the agency you are using has a skip tracing service. This
service enables the debt collector to track the defaulting client even when
they have not left any forwarding address, and can help make a big difference
to the success of debt recovery in Australia.
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