A strong in house credit and collection process is key for any company. It not only minimizes losses but gives you the most control over your account receivables. In some cases though, it may make sense to seek outside help to collect some accounts. Here are some good guidelines to follow when it comes to making that choice.
How long should you wait?
It is important to always give your own in house credit and collection process time to run its course. A strong in house system can drastically minimize the need for an outside collection agency and help you retain all of the recovered money. This is only true though if you trust what you have put in place and let it run its course. We have written before about an appropriate collection timeline to follow and what you should do at each step. This process will range but can take anywhere from 3-4 months. At that point, the customer has shown that they do not intend to pay and at this point, you may want to start to consider outsourcing to an agency. This is not cut and dry though and it can vary from case to case. The important thing to consider is that you want to spend your time most effectively so if you have a lot of newer cases to handle, it may be time to let this one go.
What do I gain from outsourcing to an Agency?
This will depend on the agency, but if you are running a strong credit and collection process you should be gaining only a few things. You gain the time to pursue other accounts. You gain a fresh perspective on the account. Sending an account to an agency also shows your customer you are serious and they may prioritize your debt over others. The important thing to remember is that you should view a collection agency as part of your process, not the entire process. You have far more to gain collecting the debt yourself than you do outsourcing. An agency is just another tool in your toolbelt.
At the end of the day, outsourcing to an agency makes sense when the cost to pursue the debt yourself no longer justifies the potential reward. Unfortunately, this will happen from time to time. It is not your fault or the sign of a faulty system. Agencies exist for a reason. They are experts in the field and there to help when needed, but you should always let your in house system run its course first.