Some Important Reasons Your Business Should Consider International Collection Agencies
Posted by: Guest Author / Category: CreditIf you’ve made the commitment to using commercial debt collection, you may be wondering whether or not it’s necessary to employ international collection agencies if some of your clients are overseas. Following are some questions that will help you decide whether international collection agencies are necessary, or if you can handle your own international debt recovery.
First, what is the percentage of your receivables that come from other countries? If you have one or two clients on other continents that are slow payers, it may not worth the time and effort to hire an international firm just for them. However, if a significant portion of your receivables come from other countries, it very well may be.
Say you’re a US business that has clients in Canada and Mexico, and 45% of your receivables come from outside your own country. In this case, it’s definitely worth it to hire an international agency. True professionals will be familiar with local laws, languages and business practices.
In addition, hiring a local collection firm will show your clients that you’re truly committed to recovering debt. It’s a lot easier to ignore a phone call from another country than it is to ignore phone calls from international collection agencies, especially if the callers are local attorneys.
Some international collections companies may have offices scattered throughout the world, while others may specialize in one location, so you may need to hire more than one to cover all the areas you service. This is not a problem, as it’s common practice to spread collections out amongst several agencies anyway to enhance the chances of recovery.
This being said, attorneys cost more than ordinary people when it comes to debt collection. If your receivables in a particular region are small, it may make more sense to just write off the debt, but once they reach critical mass you get more benefit than cost out of using an international firm.
In some cases, your clients may fit all three of these profiles. It is best to have one agency per region do collections, so choose international collection agencies that have experience with all three types of debtors if you fit this profile.
The final thing you need to know about international collection agencies is how they handle fees. Most collection agencies will accept a part of the return as their fee, so there’s no reason to pay up front. However, you still need to check out the currency issues. Do they take their fees in dollars or local currency? Do they recover the money in dollars or local currency? If they recover in local currency but pay you (and take their fees) in dollars, how and when do they calculate the exchange rate? If you use international collection agencies that have offices in other countries, this is less of a problem but it’s still worthwhile to ask them these questions.
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Tags: accounting, accounts receivable, business, cash flow, collection agencies, Credit, debt collection, debt management, Finance, international, profit recovery