Although launching and running a start-up business involves a wide range of responsibilities, one of the biggest obligations that you have as the owner is ensuring that the business's cash flow is not disrupted. The more accurate the forecast of your cash flow is, the better equipped you are at identifying areas of your business that need to be improved upon to ensure the success of the start-up.
Moreover, your cash flow will also help you identify aspects of the business that require more funds as well as whether these funds should come out of pocket or if it will be best to look for an investor. If debts are interfering with your start-up's cash flow, it is advisable to seek the services of a debt collection agency. However, picking the right collectors is not merely about looking for the most affordable solution. Instead, check out the following considerations that you need to have when looking for the right debt collection agency for your start-up.
What percentage will be the debt collection agency's cut?
One of the foremost factors you need to take into account when looking to hire a debt collection agency is the amount of money that they will take from the collected debts. Typically, this sum is arrived at by the percentage that you will agree upon with the collection agency. Bearing in mind that this percentage is calculated by the debt collection agency, you should know that it can vary from a quarter of the collected sum to half of the amount of money the collection agency can recover.
In addition to this percentage, you should consider the potential loss of income that your start-up business will face, as customers are highly unlikely to do business with you once you have hired a debt collection agency to flow up with them. In some scenarios, the potential loss of business from these customers could be greater than the sum of money you stand to recover from their debts.
What experience does the debt collection agency have in your line of business?
The second thing that some new business owners are unaware of is that debt collection agencies will specialise in specific industries. Hence, you have a better chance of your money being recovered by a collection agency that knows the ins and outs of your specific industry than one that is unfamiliar with it.
For example, if your start-up company is home-based and has a small clientele, you should hire a debt collection agency that is familiar with these types of businesses than those that are specialised at collecting debt from large firms and vice versa. The reason why it is best to hire a debt collection agency familiar with your business model is that they will also be conversant with the local laws governing debt collection for individuals, companies and so on.Share