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When Should you Not Hire a Collection Agency

There are several circumstances when hiring a collection agency might not be the best option.

  1. Small Debts: If the debt owed to you is small, it may not be worth the cost of hiring a collection agency. Collection agencies usually charge a percentage of the amount collected. However, if the outstanding amount is insignificant, there is no point in risking your reputation. Moreover, if the amount is quite small, most collection agencies will not dedicate adequate time because even they earn hardly anything from it.Solution: Ask if a collection agency offers diplomatic Fixed fee demands service that costs about $15 per account, and there is nearly zero possibility of risking your reputation.
  2. Recent Debts: If a debt is recent, it may be more beneficial to try to collect it yourself first. Often, a simple reminder or a payment plan can be enough to get the debtor to pay. Assign accounts only after someone has not paid you for 60 days or at least two billing cycles.
  3. Sensitive Relationships: If the debtor is a longtime customer, friend, or family member,  using a collection agency may strain or permanently damage the relationship. In these cases, it may be better to try a more diplomatic approach or to consider writing off the debt as a loss.Solution (same): Ask if a collection agency offers diplomatic fixed fee demands service that costs about $15 per account, and there is nearly zero possibility of risking your reputation.
  4. Legal Concerns: If there are any legal issues surrounding the debt, it may be more prudent to consult with a lawyer before involving a collection agency. This could be the case, for example, if the debt is disputed or if the debtor is going through bankruptcy.
  5. Poor Agency Reputation: If a collection agency has a poor reputation or is known for using harsh or illegal collection tactics, it’s better not to hire them. Their actions could harm your business’s reputation and potentially result in legal consequences.Solution (same): Need a highly-rated collection agency? Contact us

  6. Documentation Issues: If you lack proper documentation to prove the debt, a collection agency may be unable to help. In fact, it could potentially lead to disputes that harm your business’s reputation or result in legal trouble.
  7. Cost-Benefit Analysis: If the cost of hiring a collection agency exceeds the potential benefit of recovering the debt, it might not be financially worth it. You need to weigh the cost of the agency’s services against the amount of debt to be recovered and also consider the impact on your business operations and customer relationships.
  8. Lack of Control: Once you hand over your unpaid accounts to a collection agency, you will have less control over how your business’s debt collection process is handled. This could be a concern if you want to maintain a specific brand image or approach to customer service.Solution (same): Go for the Fixed fee service, you are in full control of the service.

Filed Under: Debt Recovery

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    Note: Nexa is an information portal that helps businesses and medical practices to find a good collection agency at no cost to them. We are not a collection agency. We do not perform any collection activity, nor take payments, nor do any credit reporting. Leads shared with shortlisted agencies with Low Contingency Fee and High Recovery rates.

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