7 Common Myths About Debt Collection Debunked

Along with traffic wardens, politicians, journalists and merchant bankers, debt collection is one of those professions that has a perennial problem with its public image.

But while the unfortunate association between debt collection and burly, menacing men using dubious means to take money from the poor and unfortunate may still persist, as with many things in life, there is significant gap between perception and reality.

As a modern professional service, debt collection is more similar to accountancy or the legal profession than the gangsters of TV programmes and the tabloid press. Moreover, the debt collection sector is all about standing up for the little guy - much of the work we do is helping freelancers and small businesses control their credit and cashflow so they can keep trading.

Here are some common myths about debt collection, and the reality behind them.

Myth 1 - Debt Collectors will knock on my client's door demanding payment and threatening to remove property.


People often confuse debt collectors with High Court Enforcement Officers (HCEO) or County Court Bailiffs. But bailiffs and HCEO’s are officers of the court and have very specific legal powers, whereas debt collectors do not. Officers of the court are empowered to collect and enforce certain types of debt - usually those relating to tax, court judgments, child support and maintenance awards, and business rates or rent.

Unlike bailiffs, debt collectors are not authorised by the court and they do not have the legal right to take property from a debtor in lieu of non-payment.

Professional B2B debt collectors who follow industry standards of ethical best practice will rarely resort to visits in person as they are largely unsuitable in a majority of cases. Most of our work is done by staying in constant contact with your debtor by letter, telephone and email.

Myth 2 - Contacting a Debt Collection agency is an extreme measure I should only use as a last resort.


The earlier you contact a debt collection agency, the more we can do to help. While we would always advocate trying to resolve one-off or occasional late payments with a client directly, as soon as you feel a problem is becoming persistent and causing your business cash-flow problems, we would strongly advise you seek professional help.

Requesting payment for contractual arrears or unpaid invoices through a collections agency shows a client you are serious about your credit control, and is often enough to nip burgeoning late payment problems in the bud.

Moreover, if there is a serious problem, for example if a company is facing financial difficulties, then those creditors that take prompt action to recover what is owed are significantly more likely to get paid than those that wait.

Myth 3 - Debt Collection will damage my brand and annoy my customers.


Again contrary to persistent rumours, a reputable debt collection companies will not threaten, shout at, abuse or otherwise annoy your customers when they are pursuing unpaid amounts on your behalf. Not only is it counterproductive from a collections point of view, but like any business debt collectors want to retain their customers, not scare them away with unethical business practices that ultimately cost the client money.

An effective debt collection company specialises in polite, professional negotiation to resolve queries and recover the funds; without alienating the good relationships with your customers upon which your business relies.

Myth 4 - Collection agencies all have hidden fees or want significant payment in advance.


Stories of spurious debt collection agencies charging clients so much they end up out of pocket even when a debt is recovered unfortunately cling to the industry. The reality is such instances are rare and do not reflect the practices of genuine professional agencies. However that is not to say that it doesn’t happen and a small number of disreputable and persistent offenders still operate in such a way as to catch the unwary out with unagreed charges or significant additional fees.

When looking to engage a collections company always make sure you conduct appropriate due diligence and choose an agency with verifiable testimonials from named clients and a clean credit report. Be sure to avoid any agency that is recently incorporated, requires up-front payment of handling or membership fees and check any contract or terms and conditions carefully, to ensure you aren’t agreeing to pay any hidden or abortive fees if funds are not recovered.

Myth 5 - There is no chance of recovering an outstanding debt from an overseas client.


Although issues of distance and jurisdiction can make debt recovery from export clients seem daunting, it is far from impossible. Recognising this problem, many collection agencies have spent a lot of time and effort building up strong networks and partnerships with agencies in other countries. So if a company approaches us with a problem over a debt owed in country X, a good international debt collection company will have a local partner on the ground over there to take action on your behalf.

Again care should be taken that the company in question is legitimate and that they have a proven track record in collecting export debts on behalf of their clients. Be sure to request verifiable and named references from former customers, do not trust generic or “anonymous” testimonials.

Myth 6 - Solicitors are a better choice to collect unpaid invoices.


There is undoubtedly a time and a place for engaging a solicitor during the recovery of an unpaid invoice or contractual debt, but that place isn’t necessarily at the very start of a collection as issuing proceedings can be time consuming and expensive. This is especially true if the amount is contested and under the £10k small claims limit as it is rare for costs to be awarded in a small claim even if you win the case.

A good debt collection company will work in tandem with an experienced commercial litigation specialist, so the collections company can pursue the debt amicably to start and then pass it to the solicitor if and when their input is needed. This gives the collections company the opportunity to resolve any potential problems well before you start incurring solicitors fees.

Myth 7 – Debt collection is only for big companies not SMEs and freelancers.


Like any business debt collection companies come in all shapes and sizes and so do their customers. Thousands of SMEs engage debt collectors every day as they realise that chasing payments for goods or services already delivered diverts time away from concentrating on those profitable customers that pay on time and in full.

In addition many SMEs may not have the skills or experience in-house to take effective action and to ensure debtors are continually monitored while payment is outstanding. In these circumstances it makes sense to bring in the skills you need from a reputable outside agency, just as you would for any other skillset your company may need that it can not find in-house.

In Conclusion

Using a reputable and ethical debt recovery company should not be a cause for concern provided you conduct appropriate due diligence on your chosen supplier and are confident that they can deliver what they say.

As with any new supplier you should source a credit report, thoroughly review any testimonials or references and ensure that the directors and shareholders don’t have any short lived or high risk companies in their past. If possible, look for a company that is recommended and endorsed by third parties you trust or one that is recommended to you by others in your industry.

Safe Collections is proud to be recommended by leading business groups, industry associations and chambers of commerce and we are always here to help if you have a problem invoice you would like to discuss.

Over 150 Years Of Industry Experience

Our modest but highly skilled team has a combined total of over 150 years of experience in commercial credit management and B2B debt collection. From independent IT contractors to major film and TV publishers, Safe Collections has the knowledge and experience you need to get paid quickly and cost effectively.

Image Commit No Nuisance by Matt Brown is licensed under CC BY 2.0

© Safe Collections is a trading name of Safe Collections Limited. Incorporated 1984. Company Number: 01815264. VAT Number: GB407358159. All Rights Reserved.

Please publish modules in offcanvas position.