Can Third-party Debt Collection Improve Working Relationships?
Chasing payments is perhaps one of the most uncomfortable parts of running a business.
For smaller companies, this may come down to the Managing Director or admin teams, while larger businesses may have their own financial directors and credit control teams. So what are the keys to safeguarding your working relationships?
“Companies are going to try and use circumstances like the pandemic to get out of paying debts.”
Avoiding relationship breakdowns
“Debt collection can become an emotional issue for businesses, particularly if they are a small.”
“They may have built up a great relationship with their client, and feel personally let down by late payments, not knowing how to get paid without damaging the relationship or opportunity of more work,” explains Wendy. “By working with a third party, they can avoid those conflicts.”
So, how can a third-party credit controller help you to work through late payments?
1. You Won’t Waste Time Arguing
Emails, phone calls, even polite letters all take up your time – and can take an emotional toll on you.
“We take on the work, meaning clients can focus their energy elsewhere.”
“The biggest issue with debt collection is egos, so bringing in a third party can quite often remove this blocker”
“This removes the ‘personal’ connection and allows you to remain on civil terms with your client while credit controllers work in the background to ensure you get paid.”
2. You Can Negotiate a Payment Plan
“You always want to find a way to continue to trade,” suggests Wendy.
“An expert can help you to negotiate a payment plan, otherwise you may end up discounting the cost.”
“What’s more, your debtors might become familiar with a name or voice from your team, whom they can easily avoid. Nine times out of 10, they respond to a third party.”
3. You Can Prepare For Issues
“PCS know how to spot patterns in payment issues and excuses from payers, which some businesses themselves may overlook,” explains Wendy.
“This helps us to foresee any potential problems, enabling our clients to use their existing relationship to ‘check in’ on the debtor and send them a friendly reminder. This may also help to settle debts quicker.”
“Generally, the longer it takes to chase debt, the less chance you’ll have of getting paid in full.”
“Using a third party helps you both to reach an amicable solution, maintaining your bonhomie for the future.”
4. You Will Set Expectations
“We always advise our clients to include a clear payment clause in their contracts,” continues Wendy. “In the event that this doesn’t happen, a debt collector can provide guidance for future payments once the current debt has been settled.”
“There are currently new guidelines being put in place to deal with payments during the pandemic.”
“This ensures, in no uncertain terms, that you are serious about getting paid on time – without offending or deterring your client.”
5. You Will Spot Problem Clients in Future
While third parties help retrospectively, they can also help you to avoid legal hassles.
“Sadly, in some cases, we do have to go to court. We would always advise a client if we thought they didn’t have a strong case, and what their options would be.
“There’s a difference between the COVID-19 crisis and a load of excuses,” Wendy concludes. “By working with an expert long-term, you can soon spot the patterns and stop yourself from entering into contracts with someone who will likely become a bad debtor.”