Debt recovery, also known as credit recovery, is a process carried out by big businesses that specialise in getting outstanding debts paid, as well as the return of the product with the customer.
This means that big businesses can hire these companies so that they carry out the collection of the pendency that you stopped paying. With this, it is possible to:
- Negotiate the payment of the outstanding debt;
- Receive the money faster;
- Reduce the risks of losing the client;
- Clear the name;
- Restore the consumer’s credit.
What is the difference between debt collection and debt recovery?
Debt collection: in this option, the company contacts you by message, e-mail or phone calls. The objective of this collection is only to make you pay that pendency (an overdue bill or a negative debt);
Debt recovery: in this case, the company will also contact the consumer by message, e-mail or calls. However, the client will be offered alternatives so that he or she can negotiate the amount and pay off the negative debt.
Why is debt recovery important?
Debt recovery provides a fast and effective out-of-court negotiation for both sides involved. In addition, this initiative is fundamental to guarantee payment of debts and avoid wasting time in contacting customers. This is because recovery must be done in a strategic and cautious manner.
It should also be noted that this process is a good opportunity for the creditor company to be reimbursed for taxes that were unduly paid.
How important is debt recovery for big business
Debt recovery is an advantageous collection procedure for consumers who are in default, who – after negotiating and paying their debt – regain credit on the market. But it is not only advantageous to the consumer, because when a big business hires a collection agency specialised in credit recovery, it increases its chances of receiving overdue debts from its clients.
This is because the credit payment recovery company uses specific techniques and approaches to deal respectfully and amicably with the various causes of the consumer’s default (family illness, unemployment, accidents, change in social status, etc). And, certainly, a more flexible and empathetic approach to the situation of the defaulting consumer, besides respecting the legal guidelines for customer service and minimising the chance of compensation for moral damages due to embarrassment, also enables better reception to the collection and greater chances of negotiating the amount due.
In addition, hiring this service is a very cost-effective investment for a big business, which reduces costs by not performing credit recovery on its own. After all, it is not necessary to worry about the payment of all labour charges, training and other costs of an employee hired exclusively for this purpose, since this type of expense is the responsibility of the outsourced company.
It is important to emphasise that the amount paid to this contracted company is usually compensated by the amount of debts in arrears negotiated. Therefore, these negotiated values can collaborate to the payment of the business monthly expenses and eliminate the need to take out a loan to comply with obligations, since – at one time or another – it will be part of its working capital.
Hiring a company specialised in debt recovery also allows big businesses to concentrate on other more profitable and lucrative activities for the company, while the outsourced company is dedicated to collecting debts in default. Therefore, debt recovery service is a necessary measure for the maintenance of the company, because while it boosts its income, with the refund of an amount that would be lost, it discourages non-compliance with payments due.
Specialised lawyers who are qualified professionals can assist you in business debt recovery from defaulting debtors, through an effective and appropriate approach, capable of ensuring a successful agreement.
Mishoura can always bring these specialised lawyers to you to help your business in debt recovery.
Written By – Omar Shams