In order to keep your business afloat, you must collect payment for the products or services you render. Unfortunately, not all customers are reliable. If you’re a business owner, you likely have very little time on your hands. You may not have the time to make frequent telephone calls or to write letters in an effort to collect delinquent debts. The older the debt gets, the harder it is to collect. If your demands for payment have been unsuccessful, hiring a debt collection agency can be extremely beneficial for your business.

Many business owners have a picture in their mind about debt collectors – and for a good reason. In the past, anyone could set up a debt collection agency without being registered or regulated in any way. Today, there are rules and regulations that govern debt collection agencies. Hiring a debt collection agency is one of the easiest ways for you to put the focus back on your business, while someone else handles the debt collection process. Here are five advantages to hiring a debt collection agency:

Legal Protection

Today, there’s a myriad of laws that govern the debt collection industry, and well-informed customers won’t hesitate to sue if their rights are violated. Debt collection agencies know this, which is why they are well versed in these laws. Third-party agencies are knowledgeable in both federal collection laws and the laws that govern the state in which the agency holds a license. Allowing a debt collection agency to recover unpaid debts on your behalf eliminates the legal risks involved with attempting to collect debts on your own.

Successful Debt Recovery

Debt collection agencies have experience in collecting unpaid debts, and because of this, hiring a collection agency increases your odds of collecting delinquent debts. Your primary focus is running your business, but a collection agency’s primary focus is to collect debts. A trained professional knows the best techniques to legally coerce debtors to pay, and collection agencies post a much greater threat to debtors than you do. A collection account negatively affects a debtor’s credit score for up to seven years, and debtors often make arrangements to pay back their debts in order to avoid damage to their credit.


Collection agencies know that each business owner has a unique set of needs, and they offer a variety of programs that fit with different business models. Chances are, a debt collection agency has a program that fits with your business model. Some debt collection agencies pursue debtors for a flat fee, while others receive a commission on the amount they successfully collect. When you meet with a collection agency, ask about the different programs they offer. This will help you find the right agency for your needs.


When collection agencies communicate with debtors, they make records of it. Should you decide to sue a debtor in the future, the debt collection agency will have thorough records of each time they attempted to contact the debtor. This documentation demonstrates to the court that you put forth extensive effort to recover the debt. Additionally, if you claim the bad debt as a tax deduction, you’ll need to have this documentation for your tax files. In the event of an audit, the IRS will want to see that you exhausted every option before writing off the debt and claiming it as a deduction.

People Pay Faster

When you hire a debt collection agency, people pay you faster and more often. Some debt collection agencies offer services that accelerate the payment process, so you get your money faster. These services work with your existing billing process. When you use a debt collection agency, you won’t have to spend time chasing down your customers. It saves you time, money and energy, so you’ll have time to focus on what’s really important – your business.