If you’ve never used a debt collection service for your business, you may have many preconceived notions or questions about what a debt collection agency does. Debt collection agencies have a negative stigma attached to them, and this is mostly due to the many myths that surround debt collection. Many businesses are afraid to use debt collection agencies to help collect on past due accounts because they’re afraid that it will negatively impact their business. However, using a debt collection agency can be incredibly beneficial for small businesses and allows you to focus on your business while someone else handles the debt collection process. Here are the six most popular debt collection myths and the truth about them:

Debt collection services are something only large corporations use

Although large corporations frequently turn to debt collection agencies, thousands of small businesses benefit from outsourced debt collection services every year. Whether your business is looking to recover debts that are a few hundred dollars or tens of thousands of dollars, a debt collection agency can help. Debt collection agencies understand the laws surrounding debt collection and can help you collect your business’ debt faster.

Debt collectors can call people whenever they want

Debt collection agencies are governed by the Fair Debt Collection Practices Act, which dictates when a debt collection agency is legally allowed to contact someone about their debt. The FDCPA states that debt collectors cannot call someone before 8am or after 9pm. Additionally, if someone requests that they not be contacted at work, a debt collector must stop calling them at work. To learn more about collection laws and regulations, visit the Federal Trade Commission’s website.

If a customer doesn’t pay, they’ll go to jail

Your customers won’t go to jail if they don’t pay back their debt. Any debt collector who threatens a customer with criminal charges or jail time is doing so illegally. There is a process that someone will go through if they don’t pay back their debt, but going to jail is not part of that process.

Debt collectors are expensive

Every collection agency has their own payment structure, but collection agencies earn most of their revenue from commissions on the debt they collect from your customers. You’ll only pay an agency if they collect on the debt, and their commission is only a small fraction of the debt collected. This means that a majority of the money will still end up in your business’ pocket. Paying a debt collection agency is still less expensive than not getting paid at all.

I’ll lose customers if I used a debt collection agency

Utilizing a reputable debt collection agency should never cost you business, and it should also never harm your business’ reputation. Most customers understand that if they don’t pay their bills on time that it will go through the collections process. It’s important to choose a debt collection agency that conducts business legally and ethically. Businesses only lose customers when they use a debt collection agency that doesn’t follow the laws and harasses their customers. Doing your research prior to choosing a debt collection agency will help ensure that you choose a reputable debt collection agency that will follow the laws dictated by the Fair Debt Collection Practices Act.

I shouldn’t use a debt collection agency until invoices are extremely delinquent

The truth is, the sooner you refer the debt to a third-party debt collector, the higher the chance that it will be collected. Debts that are referred to collection agencies at 30+ days overdue are far more likely to be collected than those referred at 90+ days overdue.