Debt collection agencies can be a great resource to help you collect bad debt. Unfortunately, several debt collection myths and misconceptions scare away many businesses from their services. The goal of any debt collection agency is to collect on debts owed by their client’s consumers so that the client can recover their losses from unpaid medical bills, credit card balances, or other loans. They represent creditors in seeking repayment of consumer and commercial debts and use various strategies when necessary to help them meet this goal. Here are some of the common misconceptions and myths about debt collections debunked.
Myth #1: It is Only For Old Debts
Most businesses tend to think that debt collection is only for collecting old debts. But research shows that the earlier a debt is referred, the more likely it is to be collected. So, instead of chasing debts yourself for months and finally deciding to hand them over to a debt collection agency, you can assign the task to them in the earlier stages (0-60 days). This service is referred to as First Party Collections or Precollections. Getting agencies involved early will help build brand loyalty, maximize recovery, and drastically reduce the number of accounts that go into bad debt.
At First Credit Services, we provide customer-oriented, cost-effective First Party early-stage collections and Third-Party late-stage collections services. With our early intervention precollections strategy, we can help lower your roll rates, reduce the amount of bad debt sent to collections, and improve customer loyalty.
Myth #2: Hiring a Debt Collection Agency is Expensive
Some businesses hesitate to hire a debt collection agency because of budget concerns, but in reality, debt collections are not as expensive as most people think. What is expensive is letting your payments slip away in the long run. Many agencies are willing to work on a contingency model, so you will only pay them if they collect your debt. Also, the Commissions charged by agencies vary depending on the average balance amount, volume, and type of debt you place with them.
At First Credit Services, you’ll never pay upfront fees to use our best-in-class third-party collection service. In fact, you’ll never pay a dime unless we collect. Our brand-friendly collection services are based on a contingency model and offer some of the lowest commission rates in the industry.
Myth #3: Debt Collection Agencies Don’t Care About Anyone
We’ve heard most people say “Debt collection agencies don’t care about the client’s customers”. Debt collection agencies have a false reputation for being aggressive and harsh to those in debt. Several years or decades back, this might have been the case. However, much has changed since, and today, most debt collectors have a customer-centric strategy and empathize with consumers.
At First Credit Services, our AI algorithm uses behavioral science to personalize each customer’s debt collection experience, improving customer satisfaction. We also make full use of the data from throughout the customer debt life cycle to create a comprehensive 360-degree view of each customer. This enables us to deliver a highly precise, empathetic debt collection strategy for each customer.
Myth #4: It’s Only For Big Companies
Regardless of their size and industry, many businesses are struggling with irregular cash flow and bad debt in the current economic condition. Small businesses, especially, are struggling significantly with delinquent accounts and late payments. These small businesses tend to think that debt collection agencies are only for big companies. On the contrary, many small businesses utilize debt collections agencies. Not only does it help them recover more bad debt, but it frees up internal resources to focus on their core business.
With over 25 years of experience in debt collection at First Credit service, we have built massive databases on various industries that help us devise insight-driven collection strategies to maximize recovery rates while minimizing costs. We serve businesses of all sizes in multiple industries, including auto finance, healthcare, health and fitness, fintech, government/municipal, bankcard, and consumer loans.
Myth #5: It Will Damage My Brand’s Reputation
One of the top debt collection myths is that the debt collection agency will damage a brand’s reputation. You may think of debt collections as unregulated, unfair, and aggressive. Unfortunately, this is where a few have built a bad reputation for the many. Debt collection agencies adhere to strict guidelines set forth by federal and state legislation like the FDCPA. These laws help protect consumers from aggressive agencies. In reality, hiring the right agency can help improve brand reputation, especially if you can get them involved early enough before your customers get written off as bad debt.
At First Credit Services, we have dedicated departments for both training and compliance. These resources ensure that all agents meet proper messaging and compliance standards while communicating with consumers. Our agents are trained to show empathy while respectfully working with debtors to help resolve their delinquent balances. Our debt collection strategy blends digital engagements and human interactions to effectively maintain relationships, protect your brand, and recover more failed payments. The key to avoiding an experience similar to these debt collection myths is to hire a reputable collection agency, like First Credit Services. First Credit Services has over 25 years of experience and has an A+ rating with the Better Business Bureau. As a modern collection agency, First Credit Services is pioneering the digital debt collection approach with our revolutionary Omnichannel platform and proprietary ‘contact optimization’ machine learning engine. We have some of the best recovery rates in the industry and work with businesses of all sizes. First Credit Services specializes in both First Party Collections and Third Party Collections, and also offers Extended Business Office (EBO) services and Business Process Outsourcing services.