All businesses that extend credit will occasionally find themselves having to chase a customer that has not paid. Some businesses deal quite effectively with overdue debt, whilst others choose to engage a professional collection agency.
Most large organisations have well developed internal procedures for following up on overdue invoices, and this usually includes engaging an external collection agency if their internal process fails to get the debt paid.
In Australia, debt collection agencies are required to be licenced, and in some states, even their staff must hold a licence before they can pick up the phone and demand payment of a debt. The licensing regime is designed to protect you as a client, and the broader community from unprofessional and unethical debt collection practices.
Collection agencies provide a valuable business service, and when you find a good one you will be amazed at the value they can add to your business.
Before engaging a firm, take time to call around and ask about how they charge. Some will want to charge up-front fees, or annual fees and others will charge you fees just for sending in a debt. Be sure to explore what fees you will be asked to pay so there are no surprises down the track.
Many collection agencies promote themselves as “No Win No Fee”, however they don’t explain that this relates only to their commission, not to charges that will apply for services such as skip tracing, field calls and legal action.
We recommend you speak to other business owners that you trust and ask for their recommendation. It is unlikely they would refer you to a collection agency if they had a bad experience.
AMPAC Debt Recovery does not charge anything up-front, in fact AMPAC’s only fees and charges relate directly to the recovery of a debt. AMPAC charges a fair commission based solely on a debt being recovered. In other words, if the debt is not paid, you don’t pay commission.
If other services are required, your AMPAC account manager will discuss these with you and seek your approval to proceed before these costs are incurred.
All AMPAC clients are assigned a dedicated account manager, who in many cases has over 20 years’ experience collecting commercial debts. This means they are well equipped to explain things in detail and provide recommendations and advice that will help get the debt paid as quickly as possible.
An experienced collector can also help you improve your own internal procedures, so as to avoid problem debts in the future. Ask your agency how they can assist you with your own credit management.
The answer to this is a bit complex, but in short, yes, certain debt collection costs can be added to the debt and recovered from your customer. Beware a collection agency that tells you all your costs will be recovered – this is simply incorrect.
Some of the things that determine which of your debt collection costs you can recover include:
This is something your collection agent can explain in more detail.
As with most business services, you will be asked to sign a contract authorising the agency to act on your behalf. Read this document carefully so you understand exactly what you are signing up to.
The contract should disclose all fees and charges and when they are payable. Take time to run through the contract with your agency before you sign it and ask them to explain what each clause means and how it may impact you down the track.
This is something your collection agent can explain in more detail.
Call AMPAC Debt Recovery on 1300 426 722 or send your online enquiry to find out how we can help you recover your unpaid debt.
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.
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