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Dealing with Debtors – choosing a Debt Collection agency
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It’s an unfortunate fact of business life that at some point, you may need to take formal legal action to recover monies owed to you or your business. There are two main approaches to collecting such debts; direct legal action through the courts, or appointing an external debt collection agency.
The advantage with using a good debt collection agency is that as well as this being their area of expertise, it also keeps the debt problem at ‘arm’s length’ from your own business and may be the best way forward should you also want to maintain good commercial relationships with the debtor. It is important that you take time to choose your debt collection agency carefully to ensure you receive the appropriate level of service you require to solve your business debt problems.
Our top tips when choosing a debt collection agency are:
1. Are they registered? - make sure the agency you use is FCA registered. The FCA (Financial Conduct Authority) registration should give you additional protections should things not work out, and every debt collection agency must obtain permission from the FCA in order to be legally permitted to collect debt. An agencies FCA registration number should be clearly visible on its website and letterhead, but its always worth double checking this on the FCA’s website to ensure that it is genuine.
2. Get references - ask an agency to provide you with references from former or existing clients. Also find out how long they have been trading and what areas they specialise in. Any agency worth its salt should be happy to provide such information.
3. Don’t pay up front - reputable debt collection agencies will not charge you any upfront costs and will work on a contingent, "no collection-no fee" basis. Be very wary of agencies that require up-front fees unless there are clear and specific reasons why this may be required – there have been many stories where a customer has paid a large up-front fee for no good reason, only to see the debt collection process fail.
4. Read the small print - ask to see the agencies terms and conditions before you instruct them to carry out a collection on your behalf or before signing any contracts. In the terms and conditions, the rates for the services should be clearly stated and there should be no hidden charges.
Contact our Litigation Funding Solicitors UK
At Advantage Litigation we work in partnership with our clients to ensure that we understand and meet their expectations. Our team of highly experienced debt recovery solicitors understand how securing funds that are owed can detract from a business’s success. We are very familiar with the law in this area and will be able to handle every aspect of the process for you. We will also discuss the various finance options available and help you find a way of funding that best reflects your needs. Click here to contact us today or call 0800 160 1298.
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