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The pros of outsourcing debt collections

Although the COVID-19 epidemic could be a global disaster with a hefty cost to human lives and stability in the economy However, there are some positives that emerge from the ashes. First, the digital revolution has been driven in a profound way by the shift to remote working . Businesses around the world have realized the potential and benefits of remote working.

There would always be initial concerns over the effectiveness of remote teams as well as worries about security of data, however these concerns have proved to be completely unfounded. Many organizations were able to change their work practices almost in a matter of minutes and the productivity of their employees has been never better.

This has resulted in an astonishing level of acceptance of remote working and it’s likely that this change in mindset could have long-term implications. The cost of having a big centralised office as well as the mental health benefits that are associated with a more flexible work-life balance could create a future in which working from home is the norm.

This deconstructed view of the contemporary workforce is likely to result in an increase in outsourcing particularly in other functions that are not core. However, while the obstacles to outsourcing may seem similar to those that kept many from working remotely for several years, it is worth pointing out several fundamental differences that we need to be uncovered.

There are advantages and disadvantages that are specific to outsourcing, especially in the case of outsourcing debt collection services. So, in this article we’ll discuss the advantages and disadvantages of outsourcing debt collection.

The advantages of outsourcing debt collection

The rise in outsourcing may not just possibly be fueled by a relaxed attitude towards remote work, but also due to the huge amount of debt that is expected to be created due to the numerous worldwide bounce back and loan programs which were implemented in direct response to the epidemic. Banks are likely to turn for collections specialists from outside in order to pay off the massive debt. But will outsourcing solve all of the problems? Here are some reasons that it could be the solution to certain.

Experienced – A professional collection agency could have the expertise and know-how to successfully recover debts you are not able to. A bank could be one of or more distinct aspects to millions individuals, however a debt collection team exists solely for the purpose of pursuing debt. It means that they could be more reliable and stable because they have more knowledge of the laws and regulations regarding collections.

Professional assistance Professional debt collection team will have the necessary tools and information to use and will be more efficient than smaller in-house teams and can get the job done faster and more efficiently. They’ll also be equipped with legal expertise that you do not need to know about.

Savings, especially for small business owners There have been only a handful of more important moments in the past in terms of conserving resources. The outsourcing of debt collection to an external company saves you time and effort of locating debtors as well as the costs associated with hiring an entire team within your company. It also allows you to shift your valuable resources elsewhere.

The pros and cons of outsourcing debt collection

There were always concerns about an absence of control and security for data which slowed the progress of many businesses that might have thought about outsourcing their debt collection. While it’s thought of as less than an “leap in faith” nowadays but there’s still numerous potential dangers to be negotiated. We’ll go over the pitfalls more in depth.

expense – We’ve previously suggested that outsourcing debt collection could help you save money, certain companies may be more expensive than what you’re willing to pay. Costs will differ based on the organization and the type of fee they charge, which could range from 10% to 10% in some cases.

In control – If you manage your collections of debt in-house, you’ll have more to control the steps your team of collections takes. Transferring the responsibility to someone else could initially appear like sharing the burden and responsibility however it also strips you of your agency’s status as a company. Also, you have no control regarding the type of employees employed by you.

Client relations – If you outsource your collections , you are at risk of causing a negative impression on your clients since there is an inherent negative stigma associated with third-party collections teams are involved. This is particularly true when you are working with an agency with a shady history of poor communication abilities.

Priority – Lastly you’ll be among the businesses the agency outsources work with, and you’re not always their first priority.

All together under the same roof using the correct solution

However, with the correct debt collection software in place the benefits outsourcing your debt collection might not be quite as appealing. A reliable and flexible in-house debt collection solution is a cost-effective and efficient option to ensure that the expertise and savings you’d get from an external company are managed and, in certain cases fully automated.

If you’re a bank or utility firm, or a telecom business there’s always going to be a component in the mix. By keeping your team in-house you’ll not only gain greater control over your debts, but you’ll also get to know your customers as well. In the current uncertain state of the financial industry today and the ever complex global debts that are affecting all of us, understanding and experience are never more sought-after assets.

To find out more about how our debt collection solutions can assist in simplifying and streamline your team in-house Contact us today