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The Different Types of Debt Collection Agencies

Business

The Different Types of Debt Collection Agencies

An issue that many businesses and individuals in the UK will experience at some point is the owing of money.

This is a problem that is unfortunately frequent, and in recent years has shown no signs of stopping.

It has been found that around 43% of SMEs experience late payments every year.

This is a staggering percentage and demonstrates how persistent this issue is in the United Kingdom.

For businesses, the non-payment of services such as invoices can be quite a common occurrence.

However, when invoices go unpaid more often than not, this is when immediate action should be taken.

It is a sad reality that the client you have trusted for a long time can suddenly become a bad debtor overnight.

This can also be said for private debts, as friends and family members may have borrowed money and not paid you back.

No matter the type of debt situation you are in, you should take the necessary steps to recover this as soon as possible.

The longer you leave the recovery of a debt, the longer your finances and cash flow will be affected.

Cash flow is one of the most important aspects of any business and is ultimately responsible for its longevity.

Debt recovery can be carried out in several ways, with each method having a different cost and success timescale.

Knowing which method to choose to recover unpaid fees can be challenging, but is very straightforward.

Continue reading to find out the best methods for collecting money that is owed to you or your business.

Types of Debt Collection Methods

There is a plethora of methods for undertaking debt recovery, and choosing the right one is important to you and your business.

Some methods are more expensive than others and have different success rates depending on the one you choose.

Many people perceive debt collection to be more hassle than it is worth and end up abandoning the debt.

You should be aware that this is not the case and you should never abandon your debts.

Why would you abandon a debt when the money owed is rightfully yours?

Collecting a debt independently is a common method for those who have never experienced this before.

Whilst it may seem like a valid option, you may end up wasting valuable time and resources by doing this.

Conducting debt recovery by yourself will take you away from carrying out beneficial tasks such as growing your business.

A good alternative to this is by using a debt collection solicitor. 

There are hundreds of law firms across the UK, which is understandably why this is a popular method.

They are known for producing high recovery rates; however, this comes at a cost.

Some solicitors can charge as high as £200 per hour for their services, which can be expensive given the circumstances.

One of the most popular, and most affordable, ways of carrying out debt recovery is by using a professional Debt Collection Agency.

Types of Debt Collection Agencies

In the interest of choosing a debt collection agency, there are many different ones to choose from.

This is dependent on your debtor and the type of debt.

No matter the type of debt that is owed to you, there are a large number of agencies to help.

Commercial Debt Collection Agencies

When a business is not paid by their clients for goods or services, this is classed as Commercial Debts.

The most common form of this is the late payment or non-payment of invoices.

All businesses experience late invoice payments from time to time, however, when this becomes more frequent measures need to be taken.

There is a plentiful number of options for a commercial debt collection agency, such as Federal Management.

They have been regarded as the UK’s leading agency for recovering business debts since they started in 2004.

As well, they are the only agency in the UK that is regulated by the Financial Conduct Authority (FCA).

Commercial debt collection agencies are designed to keep business relationships intact by using professional tactics during the recovery.

Private Debt Collection Agencies

Private Debts are accumulated when money is owed from individuals such as friends, family members, customers, tenants etc.

Self-employed individuals experience this daily and can be extremely damaging to their business.

When a professional private debt collection agency is required, you must research the choices available.

Agencies such as Frontline Collections, have lots of industry experience collecting millions of pounds every year.

The recovery rates that are provided by them are among the highest in the industry, along with the lowest commission rates.

Private debts make up a large percentage of the overall debts in the UK, making it an industry that needs a professional solution.

International Debt Collection Agencies

Interestingly, International debt is linked to both Commercial and Private debt recovery.

The only difference is that either the commercial or private debt needs to be collected overseas.

There are specific agencies that can deal with the barriers posed by overseas debts, that have expert training in this field.

Agencies such as Federal Management and Frontline Collections can recover these.

Many debtors will try to get out of paying for services abroad as they believe the distance to be enough to stop them.

With an international debt collection agency at hand, this is never the case.

I am the founder of Startup Today. I am the main writer and have put in many hours of work into creating this blog. If you want to find out more about me then lets get in contact.

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