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Small Business Collection Agencies Get You Paid

If you're like many small business owners, the mountain of debt you accumulated during startup might have been enough to make you worry about collection agencies every time you answered the phone. But your feelings toward collection agencies are eventually going to change, if they havent already.

Small Business Collection Agency Services: More Benefits than Costs

Small business collection agency services will certainly cost more than just writing letters demanding your money back. But the amount of money youll collect, not to mention the time youll save, will more than pay it back. In fact, when you consider the hourly rate of your employees, or you yourself, collection agencies fees really can be quite a bargain.

Lets say you have an assistant your business pays $10/hour, effectively costing your business $15/hour once you count in employment taxes, benefits, and the overhead of your office. You would be lucky if that assistant spent just five hours total on each debt, and managed to collect half of them.

But you would have sunk $150 into each successful collection. Plus, theres the opportunity cost: $150 worth of time you havent spent in growing your business. So the net loss is $300, and probably more if youre a profitable business that gets a good return on your peoples time.

But if you refer your delinquent debts to a collection agency for $75 each, and they collect three-quarters of them, youve invested only $100 per debt collected. Once you factor in all the money from all the debts the agency collected for you that you couldnt have collected on your own, the return on investment is huge. Thats not even counting the saved opportunity cost, or all the stress youll save yourself and your associates.

In the end, your small business has to focus on doing what brings in the money: your core business. Leave your taxes to your accountant, your office repairs to your building manager, and your collections to your small business collection agency.

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