It is not uncommon for small businesses to extend credit to customers. Rather than collect money the moment goods or services are purchased or availed; they allow their customers to defer paying for their purchases until a specific date. Having a policy like this can be beneficial to small businesses. It not only can boost sales, it also can help them gain trust and build loyalty from their patrons.
However, extending credit also has some cons, which companies should be aware of. There is considerable risk that customers do not pay what they owe on time or, at worst, not pay at all. What is the best way to deal with this?
What is a debt collection agency and what does it do?
In Los Angeles county, small businesses that have problems with late, missed, and non-payment from their clientele can seek out a small business debt collection agency. Los Angeles is home to many such firms that can collect outstanding debt on their behalf.
Usually, if small businesses do the debt collecting themselves, the cost can be greater than the amount owed to them. If they decide to go to court for an owed amount of $1,000 or less, they very likely have to shell out more than that just to cover their legal fees. For this reason, it is smarter and more cost-efficient for them to tap the services of a collection agency for small businesses. Burbank, Long Beach, Santa Monica, and other cities in the Los Angeles County should have plenty of those to choose from.
How can a small business find the right small debt collection agency?
Los Angeles has many collection agencies that can locate debtors and recover money owed to small businesses. However, some may be better at doing their job than others. Is there a criteria in searching for a collection agency for small businesses?
Burbank and other cities in the Los Angeles area have several collection agencies that are governed by certain state and federal laws. It is vital to find one that abides by the rules and regulations and does not have a track record of unfair, deceptive, or abusive debt collection practices.
Looking into the work credentials of a debt collection firm’s employees is also vital. The members of a collection agency may have to be certified and sanctioned by an accrediting organization such as the International Association of Commercial Collectors or the Commercial Law League of America.
Another thing to take into consideration when looking for a debt collection agency is data safety and security. They have to have a secure network of software, hardware, and other data processors that cannot be easily breached, and sets of measures in place that can be readily enacted to protect confidential information in case of threats.
Lastly, good collection agencies should be able to regularly send reports. At the very least, they should deliver a monthly statement that contains payments recovered and other information pertinent to the operations of the small businesses that hire them.