When a business faces an overdue debt situation that starts affecting its financial decisions and regular cash flow, the business owner has to decide about hiring a debt recovery agency. The confusion here is whether to go for a debt recovery agency or a lawyer working at a law firm specialising in debt recovery. Both these professionals have their merits and demerits, but debt recovery professionals have a distinct advantage, and they provide better services to recover unpaid debts and get bills cleared. This report compares the services of debt recovery agencies and lawyers specialising in debt collection, and we will try to understand why the former is more effective.

WHAT IS A DEBT RECOVERY AGENCY?

A debt collection agency focuses especially on recovering unpaid debts and getting unpaid and uncleared bills cleared. For this, the professionals develop different strategies based on the industry, and they use their resources to contact debtors and communicate regarding payment negotiation. These agencies have systems and strategies designed to maximise recovery while maintaining a professional approach and not harming the relationship between lenders and debtors. The process of business debt recovery involves sending reminders in the beginning and formal demand letters later to escalate the recovery or collection process.

They continue negotiations with the debtors and offer them different payment plans as per their financial ease, and settlement options are also available. They even propose that debtors pay the debt in installments and in all these strategies, the goal they chase is one, i.e. fetching out as much money as possible from the debtor.

On the other hand, lawyers specialising in business debt recovery focus entirely on litigation, but this is not the case with debt recovery agencies. As mentioned above, they provide tailored solutions to debtors to make the payments without harming their financial situation, and they streamline the process with the help of regular communication and hearing from the debtor from the beginning to the end. They have specialised knowledge of debt recovery strategies, regulations and the laws that govern the industry. They follow all the ethical and legal guidelines and ensure that the Australian debt recovery laws are followed.

DEBT RECOVERY AGENCIES ARE MORE COST-EFFECTIVE

An interesting feature of debt recovery agencies, and perhaps the reason why people rely upon them rather than lawyers, is their cost-effectiveness. Lawyers specialising in business debt recovery or commercial debt recovery charge hourly fees, or in the majority of cases, there is a fixed fee that escalates swiftly in case the process takes more time or becomes more complex. This is not the case with debt recovery agencies as they work on a contingency basis, and this means they will seek the payment only when debt recovery expectations are met.

This makes them a budget-friendly and attention-grabbing option compared to lawyers specialising in business debt recovery. Lenders seeking debt recovery services can avoid higher legal fees and be assured that the professionals will dedicate their entire experience, heart, and soul to the process.

THEY WORK AS PER THE AUSTRALIAN DEBT RECOVERY AND COLLECTION LAWS

A very tempting feature of debt collection agencies is that they comply with Australian debt recovery laws and refrain from taking any legal action unnecessarily. The debt recovery laws in Australia are governed by AUSTRALIAN CONSUMER LAW [ACL], and there are regulations and rules maintained by the AUSTRALIAN COMPETITION AND CONSUMER COMMISSION [ACCC] and the AUSTRALIAN SECURITY INVESTMENT COMMISSION [ASIC]. These federal commissions keep an eye on the industry's activities and ensure that the rights of the lenders and the debtors are not exploited at all. Debt recovery agencies are well-versed with all the laws and stay updated to maintain compliance and fair treatment of debtors throughout recovery.

This is another advantage over the lawyers specialising in debt recovery, as they are not as focused as required and solely follow the law books and work as per their rules and regulations. This makes them inefficient in terms of friendly debt recovery, and as mentioned above, they prefer litigation over mutually agreed recovery. This is why they are more costly and time-consuming.

Here are some common questions answered related to debt recovery professionals versus lawyers.

WHY CHOOSE A DEBT RECOVERY AGENCY OVER A LAWYER?

The answer is simple that these professionals are more efficient in business debt recovery and specialise in their profession that involves managing overdue accounts. They ensure faster recovery while keeping the fees low and maintaining the relationship between the customer and the lender. They also comply with Australian debt recovery laws better than lawyers, and all these reasons allure Australian businesses to focus on business debt recovery professionals rather than lawyers.

HOW DO DEBT RECOVERY AGENCIES FUNCTION IN AUSTRALIA?

Their core functionality is to recover outstanding debts and get unpaid bills cleared while following the laws, rules and regulations maintained by AUSTRALIAN CONSUMER LAW [ACL], ASIC and ACCC. For efficient and fully compliant debt recovery, they use different strategies in a very friendly manner ranging from sending formal demand letters to negotiating payment plans and discussing undisputed and friendly debt recovery. In lieu of their services, they charge a contingency fee which means they will accept the payments only when the debt is recovered successfully.

Their services are very cost-effective, and in most cases, their payment is some percentage of the recovered debt. This means businesses don't have to pay any upfront amount to the debt recovery agency. This system makes this industry more cost-effective than lawyers specialising in debt recovery. The exact fee depends on the agency, the complexity of the debt, and the amount.

MAINTAINING COMPLIANCE WITH AUSTRALIAN LAWS

Every debt recovery agency complies with all the rules, regulations and laws like the AUSTRALIAN CONSUMER LAW. They work in strict compliance with AUSTRALIAN COMPETITION AND CONSUMER COMMISSION guidelines, and the agencies are well-versed in the rules to follow during debt recovery. They also comply with the AUSTRALIAN SECURITY AND INVESTMENT COMMISSION rules and regulations to ensure ethical, fair and legal business debt recovery NSW[if !supportNestedAnchors][endif] [JB1] without violating the debtor's rights. They become more effective in overdue debt recovery with their negotiation experience and develop strategies and settlement plans that encourage debtors to make payments easily and, thus maximise the chances of debt recovery.

The bottom line is that debt recovery agencies are more advantageous than lawyers in numerous ways in overdue debt recovery. They are more cost-effective, more efficient and capable of maintaining positive relationships with the debtors. The only point is that the business has to make informed choices regarding whether to select a business debt recovery agency or rely on debt collection lawyers to recover the funds.

Why Debt Recovery Professionals Are Better Than Lawyers for Debt Recovery?