How Do I Choose A Commercial Debt Collector?

When the Editor of Credit Managament Magazine asked me to write an article on ‘What to look for when choosing a commercial debt collection agendy (DCA)’, I did not realise then what a difficult task it would be. After some thought realised that I, as a Commercial DCA operator, had been looking at the criteria from my point of view and had to think hard as to what it is the client actually wants and needs.

I started looking more closely at ours and other Commercial DCA websites: explanations of professionalism, success, statistics, words of endearment from exisiting users, long and detailed instruction forms accompanied by n-depth, complex terms and conditions, not forgetting colourful  accreditation from as many organisations as will fit the page. And, oh yes, the cost – although I am bound to say that the actual cost to the client is often the hardest fact to find, even though it is doubltess important.

As a DCA there is a danger in becoming complacent to the success of our collection rates and relationships with clients built up over years and our wonderful explanations of what it means to ensure compliance and our duties to statutes, CSA Code and of course our latest success, becoming authorised and regulated by FCA.  All the things we see as most important to us actually, from many of our Client’s point of view, is ‘almost’ irrelevant.

When I started to analyse the Client perspective it became apparent that the main reasons why they use us, and I must assume the overriding criteria with any other agencies they may use, fall within much more simplistic criteria. I believe it to be more a wish list than a prescriptive criteria, which is probably why fulfilment of this task started to get difficult  So not in any particular order some main ‘Wants’:

• Transparency
• Recommendation
• What are our fees,
  • How applied
  • When applied
  • Will Fees remain as quoted as the case progresses
• Full explanation and risk if a matter ‘goes legal’
• Will we get any fees back from the debtor
• Do we offer other services: Legal, Tracing, Training etc.

What also became apparent as an important quality is the relationship between the actual operative dealing with the collection and the interaction with the Client, be it the receptionist through to the Credit Controller and Financial Managers/Directors. And whilst a priority to us that monies collected are placed in a client account and financial probity a must, it is often not the highest question on the list with potential clients.  That is because the Client wants an overall feeling of trust between themselves and the DCA, established through the personal contact and personalities between each.

This may appear to be an overly simplistic view of what is required, but we must appreciate that in our industry sector 60%-70% of our client base and potential client base are SME,s.  Of course it would be naive to think that they or larger and multi- national companies do not look at all the financial implications of outsourcing some debt collection, as well as having regard for accreditations, but it more often than not still comes down to simple trust and that most important of qualities, Transparency in all our operations.

When a trust is built up between DCA and Client then a successful debt outcome can also mean a good reason why a debt is not going to be collected  which can include reasons that make it impossible, such as bankruptcy or liquidation and more importantly the less factually supported reasons such as whether it is cost effective to continue.  The important thing is that a good DCA/Client relationship means that there is trust in our judgement on the matter.  The DCA becomes an integral part of their financial decision making.

That said, whilst we may think we are the most important thing to our client, it is really often a small part of their operation generally. Clients are far more concerned with sales, supply and other matters.

We still need to identify with their product or services, we cannot collect effectively unless we understand their industry, Clients naturally assume we have an understanding of their particular industry. But to sum up in everyday terms, Client wants transparency in charges and operations, a simple way to instruct, reporting procedures supplied when they want them , not when we want to send them. A trust in the knowledge and advice given to them. …and also on the list,  recommendation, financial probity, and perhaps accreditation .

We must strive to supply success, honesty, knowledge and professionalism that match client expectations. Clients do not always question our compliance or accreditation, it simply trusts us to be all those things as a given. What we must never do is let them down.

Stephen Lewis FCICM

Managing Director – LPL Commercial Services