Collect Money Owed Without The Use of Collection Agencies

I’ve spent a lot of time telling people who owe money how to deal with bill collectors.  The truth is there are some scam artists out there who will just refuse to pay for anything and hurt us all.  They have many nicknames like deadbeat, moocher, bum, and con artist.  You as a business owner have been taken or they are trying to screw you over.

You really don’t need a collection agency to do anything for you.  In fact, a collection agency lacks the power you have to collect your own debt.  All kinds of laws are imposed upon collection agencies that the original creditor doesn’t have to follow.

If you are a small business and you turn your accounts over to a collection agency then your account will not receive the attention that their larger customers get.  The agency might give you the impression they are calling your customer every day.  The attention your account or accounts receive depends soley on how much the collection agency stands to benefit from your business.  For example if you are a landlord or car repair business you will pay higher fees but see lower returns than a business like a bank or a hospital.  The agency will focus on their big clients which are their bread and butter.

The only advantage a collection agency provides you is really an illusion.  The collection agency can be a buffer between you and an irate customer.  However that barrier can be easily broken.  The collection agency cannot stop the customer from calling you or stopping into your business to yell at you.  You can tell the customer it’s out of your hands but really it is not.  The agency will tell your customer they have the right to contact you because they do.  You as the owner of the bad debt are the decision maker on everything that goes down.  You are also still liable for any bad decisions.

The illusion is the collection agency will protect you from your customer so that you don’t have to deal with the nastiness of it all.  The other illusion is that the agency will save you time.  Quite often when you are dealing with a customer that doesn’t want to pay their bill that customer will become a thorn in your side even if you have a collection agency working for you.

So instead of hiring a collection agency you can send your customer a bill and let them know you will be taking legal action against them.  If the customer has moved and you cannot locate them it’s easy enough to find people using internet search engines.  People tend to put a lot of personal information online without thinking about what they are posting.  Sometimes relatives will post information about the person you are looking for. 

 If you still can find them there are plenty of cheap skiptracing services out there.  You just have to decide if the dollar amount of your debt is worth what you’ll have to pay.  Keep in mind this is about money do not let the customer involve your feelings.  If you cannot keep your emotions separate from business then you’ll need to involve a third party and I would jump right to a lawyer.

If you can keep your feeling separate then you don’t need a lawyer you can simply take this person to court without the help of a collection agency or attorney.  The only service a collection agency can provide for  you as a business is basically a mediator, a filing system, and reporting the debt to the customers credit file.  If you take a judgement against the customer it will post on their credit file anyhow.

A lot of big businesses tend to use collection agencies to handle all of their bad debt so they can simply get it off their books and deal with new business.  Then the collection ageny just becomes like a filing system and payment center.

Anyone can hire a collection agency to collect money that is owed to them.  However, you need to decide if it’s worth paying the agency half of the money they collect for you.  You might be further ahead to take the person to small claims court on your own.  It’s an easy process and relatively cheap.