How to choose a debt collection partner in 2024

When your business is faced with choosing a new debt collection provider or considering switching from your current provider - be it from a lawyer to a debt collection agency or vice versa - there are a number of important considerations to take into account.

At Collectia, we have many years of experience with debt collection and therefore know what you as a business owner should be aware of in order for debt collection to be successful, both for your business - but also for your debtors.

In this article, we've gathered concrete advice on what we think you should look for in your next debt collection partner - as well as advice on what you can actively expect and demand from a serious and professional debt collection provider.

1. User-friendly and detailed online platform

While it may seem obvious, we often find that many debt collection companies and lawyers either lack an online platform for handling cases or offer a solution that is unsatisfactory and inadequate.

It's essential that you require your future debt collection provider to offer a stable, efficient and detailed online case portal. Such a platform should allow you to easily monitor, manage and close your debt collection cases.

The lack of robust online access to your cases with your debt collection partner can make it difficult and confusing to keep track of cases. This can result in an increased need for manual work on your part, especially when cases are not managed through a dedicated portal.

2. Integrations to your collection partner

As public authorities, including the Danish Business Authority, tighten the requirements for digitization of companies' accounts and bookkeeping in 2023 and 2024, it will also be important to consider which ERPand accounting software your company can and should use.

If your company is already in the process of digitizing various processes, or is thinking about starting, perhaps now, in 2024, is the time to consider digitizing your dunningand collection process.

At Collectia, we offer a wide range of integrations to various accounting programs and ERP systems, making it easy for you to transfer a case to debt collection with just a few clicks.

Furthermore, at Collectia we have our own in-house developers. So if you have special systems, needs or wishes on how to most efficiently transfer cases to us, we are always ready to help and customize our solutions to your specific requirements.

3. Artificial intelligence

The year 2023 marked a breakthrough in the use of artificial intelligence (AI) in many companies, opening their eyes to the potential of AI now and in the future. It's clear that AI will revolutionize work tasks across all departments, businesses and industries.

A recent survey reveals that AI is one of the primary areas of focus for top executives. This highlights the importance of AI in today's business world. Therefore, you should demand AI capabilities from your future debt collection vendor. If they don't have an AI-powered engine, it's important to understand how your cases will be handled. AI's ability to identify patterns, correlations and similarities can create a more tailored and efficient debt collection process.

The majority of debt collection companies in Denmark use a standard procedure for the collection and reminder process, where predetermined actions of time intervals are used for all cases. At Collectia, however, we believe that no two cases or debtors are identical. That's why we have developed our own AI, CAI (Collectia Artificial Intelligence). CAI is designed to detect patterns, systems and similarities between cases and debtors, enabling a more customized debt collection process for your specific case.

4. Fair and respectful debtor management

Seek a supplier that protects your customer relationships by offering responsible and respectful debtor management that takes each unique situation into account.

Suppliers who understand that every credit relationship is different - meaning no two cases or debtors are the same - can create tailored collection strategies. This strives to meet the debtor at eye level, taking into account their current social and economic circumstances.

At Collectia, we make an effort to understand the debtors' situation from their own perspective. This helps to ensure dignified and respectful treatment while working to make the collection process as stress-free as possible.

5. the price

For many business owners, price plays a crucial role. The majority of debt collection agencies offer 'no cure, no pay' in the out-of-court collection process. This means that the debt collection company only receives payment for your case if it is resolved. Typically, a small commission is then charged on the principal amount recovered.

Other providers offer a pricing model based on an annual subscription. Unlike the 'no cure, no pay' model, a commission is often not charged on the principal recovered.

In a third pricing model used by several debt collection companies, a set-up fee is charged for each case that is submitted.

That's why it's important to carefully examine the price of debt collection services. There are often many hidden costs and fees that depend on the specific details of the case and how it progresses. Debt collection agencies and debt collection lawyers often charge fees for setting aside cases, taking cases to court, transferring cases to monitoring and more.

6. Make demands on your supplier

As a business owner, it's important that you actively set requirements for your business partner based on what is essential to your business.

Your requirements can range from communication methods, billing practices, to more complex aspects such as the company's ESG (Environmental, Social, and Governance) and CSR (Corporate Social Responsibility) policies.

At Collectia, we believe that a dedicated and professional debt collection partner should safeguard the needs and priorities of their clients. Therefore, it is crucial that you formulate clear requirements for your lawyer or debt collection company to ensure a collaboration that reflects and respects your business values and objectives.

7. Get a demo of the system

Most debt collection lawyers and collection agencies offer an online system where you can create, track and communicate about your cases. It's a good idea to ask for a demonstration of this system.

Such a demo is essential to assess how well and professionally the system's online access works. The more user-friendly the system is, the faster and more efficiently you will be able to handle your debt collection cases.

If the system isn't efficient, you could end up handling a lot of communication via email or phone, which can be time-consuming and inefficient. That's why it's important to make sure the system meets your needs before you start working together.

Law firm or debt collection agency?

Deciding whether to choose a debt collection lawyer or a debt collection agency for their debt collection needs is a common dilemma for many businesses. At Collectia, we have previously prepared a detailed article reviewing the pros and cons of both options.

We recommend reading this article to gain a deeper understanding and insight into what each type of provider can offer and how it fits your company's specific needs and requirements. This knowledge will help you make an informed decision on the best debt collection partner for your business.