Most debt collectors cringe the very moment that the topic of compliance is brought up. That is because compliance issues are almost always viewed as red tape that ends up being a drag on productivity. With all of the rules and regulations that the government requires professional debt collectors to follow, many feel handcuffed with respect to what they actually can do to collect debts that are rightfully owed to them.
It’s easy to understand why anyone would fear the impact that compliance issues might have on their small business debt collection process, but there are some debt collectors that believe the exact opposite to be true. These big picture debt collectors argue that many of the regulatory issues that have been imposed by government agencies have had the unexpected side effect of making their operations run more efficiently. They insist that compliance has actually had a positive impact on their bottom line!
Is it possible that government imposed regulation could actually be forcing you to improve the efficiency of your collection process? Here are the three primary arguments that suggest just that:
You Will Eliminate Poor Prospects Faster
Most of the legislation concerning debt collection was designed to protect the debtors from unprofessional collectors. There are many laws that give debtors the right to pursue legal action against collectors who violate certain rules and regulations.
With that much power being placed in the hands of the debtors, smart collectors are going to be much faster to cut loose any prospects that might prove to be more difficult to collect. By writing off these difficult debtors quickly, the collectors will have to allocate far less resources towards these unfruitful collections, thus saving money in the long run.
Compliance Training Improves Results
Another interesting issue that comes with more collection regulations is that collection departments and agencies will be forced to increase the frequency of training to make sure everyone who participates in debt collection is up to speed on the latest compliance issues.
This additional training will almost certainly include new training on collection tactics as well, making every member of the team more skilled with collections. More training is also likely to make the employees receiving that training more likely to bring that knowledge to the workplace on a daily basis. This improvement in employee collection skills will result in a more efficient collection team.
Compliance Prevents Lawsuits
Even if you have never violated any regulations, one of the easiest ways to jeopardize your business is to get caught up in a lengthy legal battle with a vindictive debtor. The best way to avoid this type of situation is to go out of your way to ensure that every single aspect of your operation is in compliance and be able to demonstrate evidence of this if necessary. Legal battles can be a tremendous financial drain, so any that can be eliminated would return the money you would have spent on them straight to the bottom line.
No one actually likes the idea of a government agency dictating how to manage your business or interact with someone who owes you money. However, spending a little time up front to understand compliance issues could pay huge dividends down the road if you are willing to think outside the box.