Ensure customers pay you on time

Advantages and disadvantages of using a debt collection agency


Before taking court action to collect debts, you could consider instructing a debt collection agency.

Advantages of using a debt collection agency

  • Debt collection agencies have the time, expertise and resources required.
  • Some agencies now offer a no collection no fee service.
  • Debt collection can be a fast method of recovering debts so could save you time.
  • If the debt collection agency is polite and professional, you may keep your customer - this is unlikely to be the case if you take legal action.
  • The agency can instruct solicitors on your behalf if your customer still refuses to pay.

Disadvantages of using a debt collection agency

  • Using a debt collection agency can be costly - the commission on the money recovered is typically 8 to 10 per cent for commercial debts.
  • You may lose your customer if the agency has poor communication skills.
  • If the agency takes a heavy-handed approach, your reputation may be damaged.
  • Your business may not be a priority - you may be one of many businesses the agency works on behalf of.
  • The agency may not use legally trained employees.

You should also check that your agency is registered with the Credit Services Association (CSA).