While the COVID-19 pandemic might have been a global catastrophe with an incalculable cost to human life and economic stability, there are a few positives to have emerged from the wreckage. For one thing, digital transformation has been catalysed profoundly by the move towards remote working and businesses across the globe have also begun to realise the power and convenience of flexible working.
There were always going to be initial concerns regarding the efficacy of remote working teams and fears around data security but these fears have proven to be almost entirely misplaced. Countless organisations managed to successfully pivot their working practices seemingly overnight and productivity has never been higher.
This has led to a surprising level of global acceptance when it comes to remote working practices and it seems inevitable that this shift in perception will have long term implications. The expense of a large, centralised office and the employee mental health benefits that come with a flexible working lifestyle could lead to a world where working from home is the new normal.
This deconstructed approach to the modern workforce is also likely to lead to an increase in outsourcing, particularly when it comes to non-core functions. But while the barriers to outsourcing might seem similar to the barriers that held so many back from remote working for so many years, there are quite a few fundamental differences to unpack.
There are pros and cons that are unique to the concept of outsourcing, particularly when it comes to outsourcing your debt collections services. That’s why, below, we’ll be focusing on the benefits and drawbacks of outsourcing debt collections.
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The pros of outsourcing debt collections
The growth in outsourcing will not only potentially be driven by relaxed attitudes towards remote working but also by the sheer volume of debt forecast to arise as a result of the various global bounce back and loan schemes that were applied as a direct result of the pandemic. Banks are likely to look to external collections teams as they struggle to deal with so much debt. But is outsourcing going to solve all problems? Here are a few reasons why it might be the answer for some.
Experience - A professional collections agency might have the expertise and knowledge to successfully collect debts that you cannot. A bank is a dozen or more different things to millions of different people but a debt collections team exists for the sole reason of collecting debt. This means they will potentially be more confident and consistent as they will have a greater understanding of the rules and regulations surrounding collections.
Professional help - A professional debt collections team will have all the right tools and knowledge at their disposal, which means they might be more effective than less specialised in-house teams and be able to collect better and faster. They will also come armed with legal knowledge that you don’t necessarily have to be privy to.
Savings - Particularly for small businesses owners, there have been few more vital times in history when it comes to conserving resources. Outsourcing debt collections to an external team saves you the time and hassle of tracking down debtors and the expenses of employing a full-time team in-house. This also means you can divert valuable resources elsewhere.
Learn more about how the EXUS Financial Suite can positively influence your debt collections
The cons of outsourcing debt collections
There were always fears over a lack of control and data security that held back countless businesses that would otherwise have seriously considered outsourcing their debt collections. But while it might be seen as less of a “leap of faith” these days, there are still a lot of potential pitfalls to negotiate. Here, we’ll be discussing those pitfalls in greater detail.
Expense - While we previously argued that outsourcing debt collections could save you money, some agencies might charge more than you’re willing to pay. Prices will vary depending on the agency and the type of fees they charge, which can be up to 10% in many cases.
Control - If you keep your debt collections in-house then you have a greater degree of control over the actions the collections team takes. Handing the reins over to somebody else might initially seem as if you’re portioning off responsibility and worry but it also robs you of your agency as a business. You also have no say over the kinds of employees that will be working for you.
Client relationships - By outsourcing your collections you run the risk of alienating your clients as there is an innate negative connotation where third-party collections teams are concerned. This is especially true if you work with an agency with a notorious track record and poor communication skills.
Priority - Finally, you will be one of many businesses the outsourced agency works with and you are not always going to be their top priority.
Keeping it under one roof with the right solution
Of course, with the right debt collections software solution under your belt, the positive aspects of outsourcing your debt collections might not seem quite as enticing. A secure and flexible in-house debt collections solution is a practical and affordable way to ensure that the experience and savings you’d make with an external agency are taken care of and, in some cases, completely automated.
Whether you’re a bank, utility firm or telecommunications company, debt is always going to be a part of the equation. By keeping your teams in-house you’ll not only have more agency over your debts but you’ll also learn more about your customers too. And given the uncertain state of the financial sector right now and the increasingly complicated global debts facing so many of us, knowledge and agency have never been more desirable assets.
To learn more about how our debt collections solutions can help simplify and streamline your in-house teams, contact us today