Essential Things to Know Before Hiring a Debt Collection Agency

by Andrew Thomas Debt Recovery Rules and Limitations Related

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.