Self-collection - here are all the advantages (and disadvantages)

At Collectia, we love to share content about finance, accounting, credit checks and debt collection. Despite the fact that we are a debt collection company with over 150 years of experience, we do everything we can to be as objective as possible when it comes to, for example, the choice of supplier, choice of products and whether you should do debt collection yourself or not.

The topic of whether to pursue debt collection on your own or through a professional debt collection partner is one that we get asked a lot.

In this article, we focus on self-collection: what are the advantages? what are the disadvantages? what do you have to do yourself? when is it appropriate to try to do it yourself and when should you leave your debt collection cases to an external partner such as a debt collection agency or lawyer.

Self-collection - what is it?

Self-collection basically covers all the actions associated with debt collection when a company handles the debt collection process on its own. In other words, self-collection covers calls, collection notices, reminder letters, imposition of interest, reminder fees, setting up any repayment arrangements and, if necessary, the enforcement court.

What is the difference between self-collection and third-party collection?

Just like when you choose to have your car serviced by a mechanic - rather than doing it yourself - there is nothing stopping you from managing the entire collection process yourself.

The opposite of self-collection is third-party debt collection, i.e. collection by an external party, such as a debt collection agency or a lawyer specializing in debt collection.

A debt collection agency or lawyer can do no more or less than you can do on your own. But as with the mechanic, experience, skills and the right tools often have clear advantages - also when it comes to debt collection.

In addition, we have found that most debtors often take a letter from an authorized debt collection agency more seriously than a reminder letter from a company.

When might self-collection be a good idea?

If you only have one or two bad payers in a year, sending reminders and debt collection notices can often be the fastest, cheapest and least complex way of debt collection. Therefore, we recommend that you consider the number, size and complexity of the cases when considering self-collection vs. a debt collection agency.

When might debt collection by a debt collection agency or lawyer be a good idea?

There can be many advantages associated with outsourcing your debt collection. Most people choose to do so because of time, resources and, not least, streamlining their own workflows and processes.

If, on the other hand, your business is experiencing an increasing number of bad debtors, with a larger principal amount and the associated complexity, then a debt collection agency can quickly become the best solution.

Debt collection companies (or lawyers) have the obvious advantages that they make their living by putting debt collection into process, and have good fixed procedures for this. In other words, by choosing a debt collection company or lawyer for the job, you get a partner who is on your side and ensures that all processes, legislation and rules are complied with.Are there companies or industries that can benefit from choosing self-collection?

Basically, self-collection versus external debt collection is a question of your wishes, needs and, not least, time, and the more cases you have, the more obvious the reasons for choosing external debt collection over self-collection.

As a result, companies (and industries) with a high volume of unpaid invoices also tend to be over-represented among debt collection agencies and lawyers.

Is self-collection cheaper than third-party collection?

Many debt collection agencies often have a 'no cure, no pay' policy, meaning that they only get paid if your case is fully or partially resolved - a benefit you can't get, as all cases, regardless of the outcome, will cost your staff time and resources.

If only a few letters have to be sent out in the context of self-collection, the time spent will not be very long and therefore the costs involved will be low.

Does your business need to talk about debt collection?

Collectia has more than 150 years of experience in debt collection and is happy to help you recover debt for you. Contact us for a free and non-binding talk about your debt collection procedure - maybe we can save you a lot of time and trouble, and not least get your money home faster.