One of the most challenging aspects of running a small business is getting paid for the products or services they supply. Often the owners are not sure where to turn for advice and guidance when faced with an unpaid debt, and on top of that, in many cases they simply don’t have the time, resources or knowhow when it comes to managing the debt recovery process.
The debt recovery industry in Australia is a well-developed, highly regulated sector consisting of small, medium and large collection agencies, each of whom specialise in certain market segments. There are agencies that specialise in commercial debt (B2B) and work on a commission basis whereas other agencies specialise in recovering consumer debt (B2C), also charging a commission, whilst others in the B2C market concentrate on purchasing large parcels of debt from organisations such as banks, finance companies and utilities.
Read on to discover how to assess the debt collection market, and choose the right agency for you.
The recovery of commercial, or B2B debt is completely different to from B2C (consumer) debt collection. The regulatory and legislative environment and controls differ greatly and so too do the skills and knowledge required to excel in each field.
First of all, identify which is their area of expertise, to see if it aligns with your particular need.
To support the broader market, AMPAC Debt Recovery specialises in (B2B) collections including complex commercial matters requiring legal action and enforcement in all states and territories of Australia. AMPAC’s client base includes large and small organisations covering a broad range of industries such as building and construction, food and beverage, education, professional and business services, local government, strata and to a lesser extent, banking, finance and insurance.
AMPAC’s subsidiary company Shield Mercantile works almost exclusively in the consumer (B2C) market. Its client base consists mainly of large financial institutions such as banks, auto financiers, credit unions and building societies. The services provided by Shield are similar to AMPAC’s and include issuing demands, locating debtors, assessing their capacity to pay, establishing and managing payment arrangements as well as repossession and asset sales. Both businesses operate in a highly regulated environment, however Shield is subject to additional regulatory oversight because its work involves dealing with consumer debt.
Most collection agencies will openly tell you if your debt is something they are equipped to handle, so describe your circumstances in detail and ask them to explain how they may be able to assist you.
There are many rules and regulations that a licenced collection agency must follow. In most states and territories, agencies are required to be licensed, and in certain states, each employee must also carry a license. All debt collectors must adhere to Federal Privacy Legislation and also to the ACCC & ASIC Debt Collection Guideline for Collectors and Creditors which is designed to protect businesses and consumers from unethical debt collection practices.
Make sure you hire a debt collector who is properly licensed, and that their approach to debt collection complies with all the rules and regulations because if you hire an agency that uses aggressive or illegal tactics, you may also find yourself in hot water.
Enquire about up-front fees, annual charges and debt placement fees. Neither AMPAC nor Shield charge these fees instead, AMPAC and Shield charge a fair commission based upon an actual recovery. This means we earn our income based upon achieving a result for our client.
In addition to commission, agencies charge for services such as debtor location (known as skip tracing), company and business name searches and legal action if you authorise it.
Most importantly, ask about how the agency manages the money it collects on your behalf. Throughout Australia, it is a legal requirement that all money recovered by a collection agency is banked into a trust account and kept separate from other funds used to run the business. This is your money and you want to know it is being held securely on your behalf.
Most collection agencies will remit to you at least monthly and at the same time provide you with a detailed reconciliation of all fees and charges.
Technology plays a big part in all our lives, and the debt collection industry is no different. Many debt collection agencies have an online platform that enables you to log in and check the progress of your matters.
AMPAC Online is a web based portal for clients which makes managing overdue debt simple.
AMPAC’s portal enables you to:
AMPAC also provides online access for debtors. This technology significantly enhances debtor engagement as well as providing convenient access to pay the debt, establish a payment arrangement and communicate with AMPAC.
Payment demands and reminders are now issued via email and SMS which means that debtor contact is instant and trackable. All these features help speed up the recovery process, reduce the cost of collections and help get your money back sooner.
If you need assistance with debt collection AMPAC Debt Recovery can help you. Call 1300 426 722 or click the button below to ask us a question.
Do you have debt that needs recovering? Are you unsure on where to start? Contact AMPAC Debt Recovery for solutions today and speak to one of our qualified consultants to get you started.