The Pros & Cons Of Using A Debt Collector

Posted on November 29th, 2009 in Finance by

The Pros & Cons Of Using A Debt Collector

Any business establishment operates on a day to day basis with the end goal of achieving maximum sales at any given time. Most companies allow other companies or individuals to borrow from them with an agreement that debts must be paid when they are due and demandable.

This arrangement is normal because not all people operate on a cash basis and the truth is that businesses are runs daily on the basis of well-earned credit. Most often than not a company has to operate on a credit basis or risk losing his clients to other companies that will allow the same arrangements.

The problem with this is that most companies are not so efficient in monitoring and in dealing with credit. They tend to be very lax in seeking payment from their clients that they end up with a lot of receivables which sometimes makes the business operations no longer viable.

While it is true that businesses should have a provision for at least three percent of those debts getting into the category of bad debts they should also exert great effort in getting these companies to pay them or risk the chances of getting bankrupt.

There are companies who have people or even a division taking care of bad debts. Getting these debts paid up can go a long way in increasing the operating capital of any business. Thus the role of a person or a division that takes care of getting these debts paid is so important in any business.

Some businesses however rely on pro collection agencies to get their bad debts to a minimum. These collection agencies take care of negotiating with these people who have been indebted to the company for quite sometime now.

Getting the services of pro collection agencies can give the business owners more time on their

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hands to take care of other important matters like running the business. But this can also be disadvantageous on their part for some reasons.

Business owners should know that debtors have as much right as they have and even if the latter owe them to a degree they are protected by federal laws. A pro collection agency can be sued by the debtor for harassing him especially when these collection companies contact them during inconvenient periods. These companies are also not allowed by law to make collection phone calls at anytime before or during business hours.

It is a different situation for companies that directly lent money, goods or services to the debtor. Companies who are directly affected by the unpaid debt have more power under the law to collect these bills without most of the limitations set by the law for collection agencies.

So the next time you leave your collection work to a pro collection agency then better think again because it may be more disadvantageous to your business in the end.

The Pros & Cons Of Using A Debt Collector / Tristan Andrews

Tristan Andrews writes useful articles about debt collection agencies. Find out how using a collection agency can expand your financial horizons at http://www.collectionagencyservices.net