If your emails, phone call conversations and even personal meetings have failed to collect debt from your client, you might want to consider outsourcing to a professional who can really do the job for you – it’s either you hire a debt collection agent or hire a lawyer.
In this interview, CEO Adam Stewart of Debt Recoveries Australia explains what needs to be considered in choosing the right professional, and compares the advantages of hiring a debt collection agent versus getting a lawyer to go after your debtors.
Some of the most important factors that were discussed in this interview are:
- Area of Specialty
- Speed of Debt Recovery
- Cost Effectiveness
Transcript of the Interview:
Wayne Bucklar: Joining us today is Adam Stewart from Debt Recoveries Australia. Adam is a regular contributor to our program. Adam, just briefly what does Debt Recoveries Australia do?
Adam Stewart: Good day Wayne. We are contingent debt collection agents so we act on a commission basis, it’s a “no-win, no-fee” service that we provide Australia-wide. We collect debts through a range of clients including some government agencies, insurance companies and the commercial sector. We collect the debts, charge our commission, we also include free legal letters of demand and legal advice if needed. So we’re sort of like a one-stop shop for debt recoveries and debt recovery litigation.
What’s the difference between using a commission-based debt collection agency versus going straight to legal proceedings?
Adam: As I said, we’re a one-stop shop. We do the debt recovery but we’ve also got a law firm. Some of our clients like to go directly legal and some of the clients have trouble in making that decision. That’s what we’re going to discuss today, “What are the benefits of a debt collector? What are the benefits of going straight to legal or the benefits of giving it to one provider that does both?” The most important thing to remember is that whatever you do, do it quickly. This is the main thing that I get in my little bugbear that I have with. A lot of the clients that come to us is that the debts were over 12 months old. Sometimes they leave it for years and then I get these emails saying, “Can you help me with this? Do I need a debt collector or a lawyer?” And it’s frustrating because the recovery rate shoots right down for every month that it’s left to live fellow, the chances of recovery go right down. The one thing I will say that whatever decision that you make with these debts, make it quickly as soon as the debt becomes up to your 90 days or whatever your terms are. As soon as they reach the end of your terms and you’ve done your letter of demand or whatever you do internally, make your decision to outsource it.
What are the factors to be considered in collecting debts?
Adam: There’s a couple of main things. The first one is to make sure that it’s their “specialty.” So if you’re choosing either a debt collector or a law firm, make sure they do specialize in your area. So for instance, we do a lot of insurance claims work – so property claims and motor claims for the insurance industry. So we tend to specialize in that, we’ve got three specialists, operators who know and have knowledge in the insurance claims area for instance. So whatever your industry is, make sure that the collector that you choose has a specialty in that area. The second one is “speed.” So you’ve got to find out exactly how fast you need the money. So if you’re going to go down the legal side of things, you’ve got to factor in the fact that the legal process is going to take a little bit longer. If you’re looking at cashflow and you want your money fast, you’re probably going to go down the debt collector option because debt collectors operate on a commission basis which means that we as debt collectors are incentivized to get the money in. We don’t get paid unless the debtors pay us. So we’re incentivized to get the money fast. The third thing is “cost.” So you’ve got to look at the commission that you’re going to pay with a debt collector as opposed with the legal fees you’re going to pay with a solicitor. So a lot depends on the size of the debt. So we usually recommend that if clients have a very large debt that they probably look at the legal option because the commissions you pay might end up being not cost-effective. So they’re are three main things is make sure that they specialize in your area, ask yourself how fast you want your money back and then look at the costs involved.
What are the advantages in hiring a lawyer when debtors refused to pay?
Adam: So the main advantages in hiring a lawyer are two-fold. So if you’ve got a high quantum matter, so if it’s say over $50,000, you would probably want a lawyer to handle that. Also, if there’s contractual disputes, it’s better handled by a lawyer and yes, we have in-house lawyers that can handle those contractual disputes. So for instance, an example would be, we have commercial clients that have lease agreements. So there might be a dispute in a lease and the tenants are refusing to pay. So these matters are better handled by a solicitor where there’s contracts involved and there’s contractual disputes, they’re better have a biased solicitor and we have in-house solicitors that can handle those ones.
What are the advantages in hiring commission based debt collection agents?
Adam: Well the main advantage Wayne is that a lot of people don’t like doing the debt collection themselves. So they can outsource the whole lot. So they don’t have to make a phone call. It can be quite confrontational for a lot of people, so they don’t have to do that, they don’t have to make a phone call. They don’t like to upset their clients as well, so this gives them an easy option and it’s also the third party effect. The fact that they have outsourced it to another company, it sends a strong message to their client that they mean business and it also shows professionalism. So it proves to the client that they mean business and that they mean to get their money back. So the main I guess advantage is that all of the hard work is taken away and at very little cost as well and if we’re not successful, there’s no cost at all.
What’s the best option in choosing a company to help with debt collection?
Adam: Well, that’s a good question. So the best option is to choose one that provides both those services. So as a bit of a plug for Debt Recoveries Australia and ADC Legal. So yes, we do both. And we’ve found that even with a debt recovery process, we can provide free legal letters of demand and then even if we hit a brick wall then and if we still failed to collect the debt through the commission basis, we can then go back to the client and say, “Hey, do you want to issue proceedings? Do you want to go legal?” So we can provide that one-stop-shop solution. So the best option is to go for a company that would provide both of those options and then what we can do is either DRA or ADC Legal, we can advise the client on the best option to go with. So we can provide them with those two options and then they can choose whichever they want.
How can people get in touch with Debt Recoveries Australia and ADC Legal?
Adam: So our number is 1300 799 511 or the website is debtrecoveries.com.au
Wayne: Adam, it’s been a pleasure having you with us. I do appreciate you making yourself available to talk with us today. Adam Stewart, Founder and Managing Director of Debt Recoveries Australia and ADC Legal.
Wayne: Thanks Wayne, good to be here.
Debt Recoveries Australia – Previous Interviews
- Expert Debt Collector in Australia and New Zealand
- Weekly Blog to Help Clients and Debtors Deal with Credit Issues