Essential Things to Know Before Hiring a Debt Collection Agency
Business owners run their
businesses with the primary motive of making money by selling their products
and services. Things go pretty well and they are expected to continue to work
the same way. However, some hurdles come in the way of efficient management,
including outstanding dues and debts. This debt starts affecting the regular
cash flow and the company's balance sheet, and the sad part is that the
business owner and the management do not have enough time and resources to get
these dues and debts cleared. In this situation, the only solution is to
contact a debt collection company and seek contractors' debt recovery services.
These agencies and professionals can help business owners get their payments
cleared very quickly.
The reason is the presence of a
skilled workforce that works based on the industry, the nature of the debt and
the age of the debt. They use tailored strategies based on the industry and
ensure that the debt collection services are effective and the debts are
cleared on time. For this, it is essential to get hold of a reputed debt
collection agency, and there are some considerations to follow related to this.
We have discussed them here in this post, and we will also discuss how these
agencies are so effective.
Considerable Factors To Review
Before Hiring A Debt Collection Agency
Seeking services from debt
collection agencies is always favourable, but this selection of an ideal
company has to be done after considering some crucial vectors. This is
essential as the project involves monetary subjects, and business owners should
do the following checks on shortlisted debt collection agencies.
Conducting An In-Depth Research
Before signing a contract with
any Australian debt recovery agency, it is vital to research the shortlisted
companies. The main subject of research is the kind of debtors and businesses
that the shortlisted companies have handled. More research should be carried
out on the method of dealing with regular debtors and stubborn debtors. This
research will make them aware of the methodology used by the shortlisted
companies, and as a result, they will prevent themselves from moving in the
wrong direction.
Check Out Company's Legitimacy
As far as contractors' debt
recovery services are concerned, you must ensure that the shortlisted
Australian debt recovery company is legitimate. Moreover, the collection
strategy and its process must be licenced and comply with the debt collection
laws.
Think Whether You Need 'Skip
Tracing' Or Not
There is always a possibility of
the debtor leaving your town and working somewhere else. In this situation,
skip-tracing services become helpful. You have to first ensure that this
situation has emerged, and only then, seek skip tracing services from the
contractors' debt recovery company. The professionals working with these
agencies have access to multiple private and government databases that empower
them to trace any debtor very easily.
Shortlist Only Insured Australian
Debt Recovery Agencies
A very vital aspect in terms of
debt collection is a fully insured debt collection company. You must ask for
proof of insurance before hiring while researching and interviewing. This will
help you and the debt recovery company manage and mitigate challenges coming in
the way of debt collection and recovery.
Compare Fees And The Current
Market Trends
An essential factor to consider
while signing a contract with any contractors debt recovery company is the cost
of debt recovery and the current market trends. As a business owner, you must
be fully aware of the genuine fee structure. Remember, different Australian
debt recovery agencies will charge you differently, and hence, you should ask
them to give an itemised quote that includes the cost of every individual
service you will avail from them.
After considering all these
factors, you will manage to bring on board a reputed Australian debt recovery
agency. This company will take several strategic actions to deliver better debt
recovery services to you. Some of these actions are discussed below in this
post.
Delegating A Dedicated Officer
The first step that an Australian
debt recovery agency will take is to appoint a dedicated debt recovery manager
for your project. This professional has experience handling multiple bad
debtors and creating strategies to convince them to make payments as soon as
possible and as much as possible.
This all should be done in
compliance with Australian debt collection guidelines and laws mentioned in the
Australian Competition and Consumer Commission rule books and the rule books of
the Australian Security and Investments Commission.
Proper Screening Is Mandatory
This pointer is mainly for
financial institutions and lending agencies as they often compromise with the
screening part while grilling a customer. To keep contractors' debt recovery at
bay, the lending institution must screen the potential customers closely and
perform a background check in advance. They should also review their credit
history in detail to get a guarantee that the lender will clear the dues within
this set time frame. The details offered by potential debtors should be
double-checked and matched with various databases for authenticity.
How Does Debt Collection Work?
Calculating The Dti
The research work mentioned
above, or the screening, should also include calculating the DTI of the person
seeking a debt. This DTI refers to the monthly DEBT-TO-INCOME ratio, and if the
ratio is high, no loan or debt should be approved. The ratio of DTI helps
determine whether the upcoming lender will be able to clear the dues.
Rules That An Australian Debt
Recovery Agency Should Follow In Australia
Two commissions manage the
Australian debt collection: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION and
AUSTRALIAN SECURITY AND INVESTMENT COMMISSION. These commissions set out rules
that debt recovery professionals must follow. Details of these rules and laws
are presented here.
●
Debt recovery
professionals should not display any misleading or deceptive conduct.
●
They must not engage
in any harassment or unconscionable conduct
●
They should contact
debtors at reasonable times and avoid contacting them more than necessary.
●
Upon asking for
verification, the debt recovery professional must provide proof of the debt.
●
These professionals
cannot charge fees more than the recommendations made in ACCC and ASIC laws.
●
They must handle the
debtor's personal data very confidentially.
●
Debtors have the right
to file a complaint to ACCC and the Australian Financial Complaints Authority
if they believe that the debt collector has breached some law.
The
guidelines present in ACCC and ASIC…
●
Prohibits discussing
your debt with family, friends, neighbours or employers.
●
Limits the times of
day collectors can call you.
●
Prohibits the use of
slurs, obscenities, insults or threats.
●
Provides remedies for
consumers as well.
● Requires collectors to
verify all debts and end collection procedures if verification is not
forthcoming.
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