Have you considered a law firm specialising in debt collection?
Unpaid invoices can disrupt cash flow and can easily damage your financial security. Engaging a debt collection agency or law firm specialising in debt collection can be an investment for your company. Identifying the right debt collection agency or law firm specialising in debt collection requires due diligence, however, out of these two options, which do you choose?
Identifying the right debt collection agency is critical and can be the difference between a commercially viable recovery from a delinquent account and throwing good money after bad. Choosing to engage a law firm specialising in debt collection, rather than a debt collection agency is an astute business decision in the debt collection process and may result in a more timely and cost effective debt recovery.
Compare Fee Structures and Costs
An important factor to consider when identifying the right debt collection agency is the cost to retrieve the debt.
Engaging a debt collection agency can be costly and determined by factors such as the volume of accounts to be provided to the debt collection agency by your business, entering into lengthy contracts with the debt collection agency and most importantly, the amount of the debt to be collected. Regularly offering a ‘No Collection, No Commission’ service for pre-litigation action, debt collection agencies will charge a commission on collected monies, normally ranging from approximately 10% to 30%, irrespective of the time and effort spent recovering your debt. In the event the matter requires legal action, a debt collection agency will often be required to engage a third party law firm on your behalf in an attempt to recover the outstanding monies owed to you, which may result in you being liable for legal fees and the commission fee of the debt collection agency. A debt collection agency may be required to outsource your account to a debt collection lawyer which is arguably the most expensive and time consuming task in the debt collection process, resulting in an increased risk of delay and increase in costs as you may remain liable to pay the debt collection agency Commission Fee in addition to the legal costs.
Comparatively, it is common for law firms specialising in debt collection to charge a fixed fee for certain pre-litigation action, for example, WDS offer a $45.00 fixed fee letter of demand, the purpose of which is to warn of the legal consequences of non-payment of the overdue account. Ranging in complexity, debt collection may require legal action and indeed, legal advice and many law firms, including WDS, charge a fixed fee for undefended legal proceedings, 85-95% of which may be recoverable at the end of the proceedings. Unlike most debt collection agencies, a law firm specialising in debt collection can handle your matter from the pre-litigation action to litigation and nearly everything in between, reducing cost in recovering the debt and any unnecessary delay.
Experienced Debt Collection Agency
It is prudent to contact each debt collection agency or law firm specialising in debt collection to discuss their experience and types of clients they have acted for in debt collection, ensuring that you choose a debt collection agency or law firm specialising in debt collection that has collected debts in your industry and has the requisite experience to handle your matter. An important consideration when hiring a debt collection agency or law firm specialising in debt collection is to confirm the total number of accounts the debt collection agency or law firm deals with per month and the average debt amount. Generally, a debt collection agency or law firm with sophisticated computer systems will be able to handle over 1000 accounts per month.
Holistic approach to debt collection
When identifying the right debt collection lawyer or debt collection agency, an important consideration is the ability to provide a holistic approach to the debt collection process. Hiring a law firm specialising in debt collection will ensure that your business’ internal debt collection process and legal documents provide sufficient protection. This will ensure that all avenues to retrieve the debt have been exhausted before outsourcing the account to a third party. The law firm or agency should be used to supplement your accounts receivable team which will allow for time to be spent on tasks that will make you money whilst the third party retrieve money owed to you. This approach will also ensure that your company reputation is protected and the dogged approach in debt collection is avoided.
Hiring a law firm specialising in debt collection is the most astute business decision for the recovery of your debts. Offering fixed fees for pre-litigation and undefended legal proceedings, a law firm specialising in debt collection can often be a more cost effective, time effective debt collection procedure for you or your business
Woods & Day Solicitors offers:
- Fixed Fee of $45 (Plus GST) for a Letter of Demand
- No Commission payable from recovered monies
- No joining fees or lock in contracts
- High recovery rates
- We recover all kinds of debts over $1,000 and up to 6 years old
- Experienced solicitors to manage your matter from start to finish
- Easy to use Online Portal with 5 step Letter of Demand