An automated debt collection system is preferable to outsourcing – the big business cure for everything. Call centers to India, software development to Pakistan, manufacturing to China. People who sell debt collecting services like to make us think that outsourcing will solve all our cash flow problems. I’m not sure that this big business wisdom makes small business sense in this case. Let me explain.
When you outsource your debt collecting:
You lose a great excuse to talk to your clients. We need to use every chance we get to impress our clients. A polite email about an unpaid invoice shows your client that you appreciate their business. Our one advantage is being able to provide the personal touch. Giving this up without getting something really great in return seems like a poor deal.
Small mistakes become big problems. Imagine how annoyed you’d be if you had a persistent debt collector bothering you about an invoice for 10 widgets when you’d only ordered 1.It’s easy to make a simple mistake on an invoice. It’s easy to fix the mistake and keep the client happy. Throw in a debt collector between you and your client and it becomes much more complicated.
You run the risk of losing the client. The debt collector wants to make sure that they get paid. You want to get paid and keep the client. The difference is overseas debt collection. You lose control of what’s being said to your clients. A debt collection agency is a business – and like all businesses they attempt to keep costs down. Do you really want a minimum wage slave in a call center representing the business you put heart and soul into? It complicates your administration rather than simplifies it. Adding an external debt collector to the mix will make things worse if you’re already struggling to stay on top of the paperwork.
Don’t get me wrong here – I’m not saying that you should never outsource your debt collecting. I think you should definitely hand the debt over for collection once you’ve exhausted your internal debt collecting process. That’s when you need a specialist. But not before. There are enough good reasons for keeping it in house as long as possible.
You see, getting-paid for the work you do is a core function. It’s the equivalent of breathing for businesses. Setting up an internal debt collection process is not hard. Technology has made it possible to follow up on unpaid invoices at very low cost and without spending hours on the phone.