Debt Collection - Introduction

Bad debts damage lives.

Creditors who can’t get paid can very quickly become debtors who are unable to pay. Even slow payment can add real cost to business operations and impair your liquidity and perhaps your own ability to pay suppliers in a timely way.

Debt collection is usually results from the failure of a debtor to pay. In such cases, the cost should be borne by the debtor. There are two important considerations -

1. At, or before the contract agreement is formed between buyer and seller, there must be agreement in place for the debtor to bear the costs. The best way is to have conditions of trade and other documentation in place that requires your debtor to pay administration, collection, legal and interest costs that can be added to the debt your debtor has to pay.
   
   
2. Your choice of agency should focus on recovery rates not commission rates, (especially if it is not you who has to pay them.) The real cost of bad credit risks is the proportion of debt that is never recovered. Reliable market intelligence tells us we have the highest recovery rates, so it’s worth putting us to the test with some of your current agency’s failures, so long as your debtors are still alive and technically solvent.