In-House vs Outsourcing Debt Collection — SimplifiedLast modified: February 16, 2024
Debt Collection can be tackled in two ways — in-house or by outsourcing debt collection to a third-party company that specialises in debt recovery for your industry. While there is no intuitive way to answer this question, businesses can weigh a wide range of factors to resolve the in-house vs. outsourcing dilemma.
Frontline Collections has extensive customer experience and has created a comprehensive guide on questions that our clients should ask themselves before committing to outsourcing their debt.
Weighing up the strengths and weaknesses of internal versus outsourced debt recovery strategies will help you discern which option meets your specific business needs and preferences. Read through our guide to help your business make a more informed choice on the model that works for your debt recovery.
Considering Your Expenses
Cost is the heaviest consideration for many business owners when debating on whether they should keep their debt collection and recovery in house or outsource it. If there is no infrastructure already in place, developing an in-house team can involve costly expenses, including salaries, equipment, legal costs, training costs, and more. Unfortunately, these expenses don’t show as your business grows and tend to increase as your customer base does.
Debt collection agencies have found a niche for providing debt collection without breaking the bank, with both small and large businesses having reasonable rates to recruit. A fee-per-service model is the most reliable and common cost, with little to no expenses for an unsuccessful recovery. Outsourcing is an attractive venture for businesses that don’t have the infrastructure to facilitate debt recovery.
Debt Collection Experience
Frontline Collections has been helping businesses with debt recovery since 2005 and gained vital experience in debt collection within specialised industries. Consider the experience that your agency or business has within the debt collection industry, specifically the accreditations that they have accrued and the skills they’ve presented that would make them highly capable of tackling complicated cases.
If the answer to these questions leaves you lacking, then consider outsourcing your debts to a more qualified debt collection agency. Choosing to develop in-house expertise in debt recovery is extremely costly and resource-intensive, and it’s up to the business to decide whether the resources committed now will be worth the investment down the line.
Control & Oversight
Businesses that prefer to keep a tight grip on their processes will greatly benefit from using in-house debt collection. In-house debt collection services also allow businesses to have direct access to their debtor accounts and manage their processes accordingly without communicating with an outsourced company.
Naturally, if you’re planning to outsource your work to a third-party business, you need to relinquish some control to the external agency. Relinquishing this control does offer the chance to free your labour for other tasks besides debt collection.
Reputable debt collectors like Frontline Collections maintain transparent communications and provide consistent updates for businesses, which can relieve management and ensure that clients are well informed and involved in the debt recovery process.
Consider Your Available Resources
As we’ve briefly touched on, managing the resources and infrastructure that are necessary for facilitating an in-house debt collection process is costly. There’s a need not only for specialised software, hardware, and office space but also for experienced personnel who understand the nuances of debt recovery procedures.
This resource investment can be significant for businesses striving to establish efficient in-house debt collection procedures.
Outsourcing, on the other hand, eliminates the need for investing resources in debt collection infrastructure and personnel. External agencies already possess the necessary resources in place and can take on the burden of collecting unpaid debts, allowing businesses to focus on their core competencies.
Current Client Relationships
The potential impact on client relationships is another vital factor worth considering when choosing between in-house and outsourced debt collection.
In-house teams can manage collections in a manner that adheres to the company’s values and principles, ensuring clients are treated with the level of care and professionalism that aligns with the business’s approach.
This control allows businesses to manage and preserve essential client relationships during the debt recovery process.
In contrast, outsourcing debt collection may raise concerns regarding the agency’s handling of client relationships. However, a professional and FCA-regulated agency like Frontline Collections prioritises protecting their clients’ reputations by following ethical debt recovery practices.
This collaboration enables an outsourced agency to act as a seamless extension of the business, minimising any potential impact on client relationships.
Legal & Regulatory Compliance
Debt collection involves navigating various laws and regulations to ensure compliance and minimise legal challenges. Outsourced debt collection agencies possess in-depth knowledge of the applicable rules and regulations, ensuring that they carry out their services in a legally compliant manner.
For in-house teams, keeping abreast of these legal requirements and ensuring compliance can be challenging, and the consequences of non-compliance can be severe, including lawsuits and reputational damage.
The expertise of professional debt collection agencies in this area offers a major advantage to businesses outsourcing this function.
Choosing What Works For Your Business
The above factors should be a broad overview of what your business should be considering before making a final decision between in-house and outsourced debt collection, but choosing which will work for your business is a multifaceted issue that should account for more than just cost, expertise, control, resources, client relationships, and legal action compliance.
Using an outsourced debt collection agency that is FCA-regulated and experienced will allow businesses to have the highest chance of success in debt recovery. A prominent outsourced debt collector should also have coverage of the entire UK and be easily able to collect debts from London as well as Scotland.
Discover how Frontline Collections’ tailored debt recovery services in the UK can take the weight off your business’ shoulders and successfully recoup unpaid debts. Contact our team of experts today to discuss the optimal approach to managing and recovering your outstanding payments for a healthier financial future.
Frontline Collections — UK’s #1 Choice for Outsourcing Debt Collections
At Frontline Collections, we recover more for less using our award-winning FCA-regulated service and years of experience as the UK’s #1 outsourcing debt collection agency. Our comprehensive debt collection solution can cater to businesses of all sizes and demands.