Whether you’re a small, medium, or large-sized business, your organization may have considered hiring a debt collection agency to convert unpaid invoices into much-needed cash. After all, your in-house collections department doesn’t have the experience, expertise, or workforce to recover your accounts like a team of specialists can.
However, a quick glance on the Internet shows that thousands of debt collection agencies are operating in the United States. You’ve probably heard that many debt collection agencies resort to unethical tactics such as aggression, robocalls, harassment, and more.
Should you take the time to find an agency that abhors such tactics? Or should you simply hire the first agency you see online to take over your debt recovery process? Let’s look at some key benefits of hiring an ethical debt collection agency:
1. Good Karma
This might sound a bit sentimental, but if you believe that the results of your actions have meaning, you should avoid partnering with a debt collection agency that bends or breaks the rules. Harassing your former clients can result in a snowball effect that may ultimately result in misfortune for your company.
2. Better Results
While it may seem counter-intuitive, debt collection agencies that use ethical tactics often yield better results. For example, one of the most reputable and honest debt collection agencies in the business, Summit A*R — boasts a recovery rate that’s twice the national average across a broad range of industries.
Honorable debt collection agencies have a higher recovery rate because, contrary to popular opinion, a diplomatic approach to debt collection is more effective. You see, most customers want to pay their dues. An ethical debt collection agency helps them find a way to pay what they owe through negotiation and a firm but professional attitude.
Remember, no one responds well to threats and insults. In fact, many debt collectors will tell you that debtors hang up on them if they resort to underhanded tactics. Instead of responding to angry phone calls with payments, debtors, even those ready to pay, become stubborn and refuse to cooperate.
Ultimately, a debt collector may take them to court, but this takes time. Meanwhile, the statute of limitations may pass on the debt. Alternatively, a stubborn debtor may agree to pay a much lower sum from a creditor that wronged them.
After numerous complaints from consumers about shady debt collectors, the Federal Trade Commission (FTC) passed the Fair Debt Collection Practices Act (FDCPA) to govern the actions of debt collectors. If debt collectors violate the FDCPA, they may be blacklisted or face heavy fines from the authorities.
In addition, consumers whose rights have been violated can sue bad actors for a significant sum of money!
In the digital age, anything can go viral. An adverse incident associated with your company can be seen by millions of people on the Internet, bringing your stock value down overnight. At the very least, your office may field countless angry phone calls from people unhappy with the debt recovery tactics used by your debt collector.
When you partner with a moral debt collection agency, you’re more likely to recover your payment and preserve your valuable business relationships and your reputation.