Are you guilty of overselling and under performing?

This week I’m grateful to a statement I read which was attributed to a rival debt collection agency. The statement proudly claimed that their agency could guarantee to collect 85% of all debts passed to them. It further went on to say that they didn’t believe there was a debt that they couldn’t collect.

I was amazed by the statement as I felt that at Deanem Collections we are pleased if we managed to collect an average 40 – 50% of debts passed and resolve a further 25%. I decided to speak to the agency concerned, because if they could guarantee the % it may have been worthwhile outsourcing our collection work to them.

I made two calls, the first posing as a potential customer. I was amazed at the commission rate they charged as they only had two rates under 6 months @ 25% and over 6 months @ 40%. I mentioned that the rate seemed high and was told that the rate could be reduced if I was to pay a handling charge of 10% of the debt, commission would be reduced to 10% and 25% but as they can almost certainly guarantee collection it was “a bit of a no brainer”. I then uttered those immortal words “I’ll think about it”.

About an hour or so later I called again, this time as myself and spoke to “Mike” and explained that I was possibly interested in outsourcing our non-collected debts to them, especially if they could guarantee collection. Mike suggested that we met for a cup of tea and see if we could work together.

During the meeting Mike, explained about their commission rates and handling charges, he also let slip that the stated collection rate was slightly exaggerated as the true figure was around 50% resolved or collected. I asked him what he told customers when they didn’t collect, he said very simply “we’re sorry but this is one of those rare cases where we haven’t been able to collect the debt” in the meanwhile they’ve pocketed a fee for not collecting the debt. I asked him if there was any negative comments from their customers when they didn’t collect, Mike said that while “punters” will generally be upset, his team was very good at making them feel that they’ve tried everything to collect the debt. I asked if they got much in the way of repeat business and he said no. He carried on by stating “That while there was an unlimited number of businesses out there who were suffering from bad paying customers, there was a ready flow of “punters” that were desperate for someone to collect the debt, who needed repeat customers”.

Mike then asked if I had any cases that we could pass to him, as he thought we could both make money out of our uncollectable debts. I said I would think about it, thanked him for his hospitality and then said I had to go to an appointment and left.

My meeting with Mike only went to reinforce my belief that there is a correct way and a wrong way of acting as a debt collector. The right way is to never guarantee your customer anything other than you will try your very best to collect their debt. The wrong way is Mike’s way which seems to embrace P.T. Barnum’s motto “There’s a sucker born every minute”

If you would like to find out more about David and Deanem Collections please do not hesiatet to contact us on +44 (0) 208 446 7720 or email us at enquiries@deanemcollections.co.uk or visit our website www.deanemcollections.co.uk.