The benefits of outsourcing out-of-court collections

Amicable collection is the first step in the collection process.
It takes place when an invoice is past its due date, often as early as 30 days after it was issued.
It should be noted that this first stage must always be handled with the utmost vigilance.
Indeed, launching a debt collection procedure means that your debtor has not paid what is due within the allotted time.
This is not the most pleasant stage for either party.
As your customer relationship is of paramount importance, you need to preserve it without letting it overwhelm you.

The advantages of outsourcing amicable debt collection

While some like to decry the outsourcing of amicable debt collection, it’s important to remember the benefits for businesses.
Of course, all outsourcing, whether it involves collections or not, must be carried out with the utmost caution.
The companies offering this type of service are not all the same, and do not necessarily operate in the same way.

Save time, use professional skills

The first argument in favor of outsourcing: time savings thanks to the expertise of collection professionals.
Not all companies have people in their departments with expertise in the management of out-of-court collections.
Even if the process seems relatively straightforward, there are codes and rules to be observed if you want to stay on the right side of the law.
By entrusting collections to specialists in out-of-court collection, you can take advantage of their skills and remove a workload from your in-house resources.
This approach also makes it easy to absorb variations in the volume of your unpaid receivables.

Customized out-of-court collections

To offer an effective out-of-court collection service , you need to immerse yourself in the company’s culture, understand your customers and how they operate.
At the end of this discovery phase, a collection company can then propose collection scenarios adapted to your customers and their history.
This knowledge of the creditor is used to adapt the approach to the end customer.
It is possible to carry out amicable collection on your behalf, so that outsourcing is “discreet”.
In this case, we sometimes speak of commercial reminders.
Other companies prefer to be “transparent” when it comes to outsourcing debt collection.
This is absolutely the case during the judicial collection phase, also known as forced collection by bailiffs.

Comments on outsourcing amicable debt collection

The most important thing when outsourcing any task is to maintain good customer relations.
This is all the more important when outsourcing debt collection.
In fact, the debt collection service takes charge of late customer payments, reminders and therefore, de facto, part of the customer relationship.
That’s why this type of outsourcing needs to be carefully thought through, to limit the difficulties involved in integrating this third party into the business relationship.
If you decide to outsource the amicable collection of your receivables, there are several points to bear in mind:

• Managing the tripartite relationship, positioning each player ;
• Fluid and secure communication of your customer data;
• How your customers might react to this third party.

If you are in a position to do so, you can inform your customers that you use an external service, and explain why in a transparent way.

Cost of outsourcing collections

In general, outsourced collection services are remunerated on the basis of the debt collected.
This is known as success fees.
In this approach, the service provider recovers a percentage of the amount collected.
Note that in B2B, late payment penalties apply to all unpaid invoices that fall due.
You may decide not to apply these charges, or to use them as negotiating leverage.
As a collections professional, SSPCollect recommends outsourcing amicable collections for companies wishing to save precious time or lacking in-house expertise.
As part of our commercial approach, and in order to preserve your customer relationship, we contact your customer-debtors to find an appropriate solution for them to regularize their financial situation.