“Before you hire a third party company for your business debt collection needs, you need to understand their pros and cons first.”

business collection agency

In 2010 alone, third party debt collection firms managed to recover around $44.6 billion in the amount of debts. It is a sobering figure, and one that needs to be considered if your business has not yet secured the services of a collections firm – think of the amount of money your business might have lost due to unpaid debts. But collection agency services are not magic bullets or miracle workers, and they do have pros and cons. So in order to help you decide if your business requires the services of a debt collection agency, below is a list of the advantages and disadvantages of these third party collections firms:


Collections Firms Can Collect in Situations Where You Can’t there are times when delinquent debtors deliberately hide and skip town, which means their debts are now total losses and can’t be recovered. Third party business debt collection, on the other hand, could help you recover these losses. Third party collections firms have people trained to track down delinquent debtors, and have resources and protocols that can be used to ethically track down these individuals and get them to pay their debts.

They Can Free Up Your Time and Resources without a third party business collection agency, your company will have to use company resources and manpower in order to do the debt collections tasks. These manpower and resources can be freed up and devoted to more mission-critical tasks and operations if you have a third party collections firm to handle debt collection.

Debt Collectors Have Access to Tools, Systems, and People That You Don’t experienced debt collectors will have advanced tools that can locate and communicate with debtors, and will have specific training on how to handle debtors without getting into trouble with the law. They also have their own legal team that can advise them on how to stay compliant with the law, while still getting people to pay up.


As for the disadvantages of a third party collections firm, here are a few:

Debt Collectors Charge for Their Services the services are not free, obviously, so even when they do collect, you still stand to lose a little bit of money. However, considering that many of the people they manage to collect from had no plans of settling their debts, you still come out better in the long run compared to just letting the debts languish.

Client Relations Could Be Affected this is only a con if you have the bad luck of hiring a subpar collections firm, but if you do end up with a debt collector who lacks communication or people skills, they may end up haranguing a debtor, which will completely sour your relationship with that client. It is bad because that debtor might have only been unable to settle their debts temporarily, and would have been a good customer afterwards but the chances of that happening are nil if they end up being harassed by a poorly trained debt collector.

With all of that in mind, it is clear that a third party business debt collection is beneficial to any business, and that whatever cons they have can be easily mitigated by simply being mindful of which agency you hire.

About the Author: Joan Gellers has been on both sides of the equation – both as a debtor when she was just starting out her business, and as a business debt collection specialist in various collection agency services when she ended up starting her own collections firm.

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