The pros and cons of effective debt collection methods, whether in-house or out-sourcing to a debt collection agency. The older a debt gets, the more difficult it becomes to collect. There are different methods available to do it, but do you know which will be the most effective for you?

Here are some things to consider when chasing debts that are overdue, and the pros and cons of each.


If your company has a credit control team with debt recovery expertise you may wish to chase the debt yourself.


  • Your team already know and have relationships with your clients. The process will be handled internally from start to finish. A more personable approach.


  • Chasing over-due payments is time-consuming. If your company is small, dedicating one employee to collect debt can leave you short for time and resources.
  • Furthermore, limiting someone to just managing credit control and debt recovery means they have less time for other jobs and responsibilities.
  • You may have to consider other overheads as it is not always cost effective to pay a salary for someone to do just this as it is so time-consuming and may only reap small benefits.


You may choose to reserve your company’s time and resources and instead outsource this task.


  • Companies that specialise in debt collection have years of experience in collecting overdue payments.
  • They take the process off your hands so you can focus on running your business. They make it stress free.
  • Often the mention of debt collectors to a debtor will be enough for a customer to pay before any proceedings take place.
  • The debt collection agency will resolve, negotiate and mediate any dispute so you can maintain a good relationship with your clients.
  • The older the debt, the more difficult it is to collect because of debtors details or circumstances changing. Having expert support will help to improve your chances of recovery.


  • You may find it daunting trusting an outside person to act on your behalf. It is important to find a debt collection company that respects and protects your brand and customer relationships as if they were their own.


Customers who refuse to pay you may need a firmer approach taking via the Small Claims Court.


  • Often the warning of legal action – i.e. a ‘Letter Before Action’ is enough to encourage a customer to pay.
  • It is an effective last resort option for a customer who keeps failing to pay you.
  • A good company will provide practical support and experienced specialists to help you.
  • If your claim is successful, the court fees are payable by the debtor.


  • Legal proceedings are often time consuming.
  • There is no guarantee you will get back what you are owed as legal proceedings are sometimes unsuccessful and you will still have to pay the legal fees.
  • Customer relationships will most likely be damaged.

It is important to evaluate the cost and risk of each debt so you can decide which process to use to give you the most effective outcome.

After all, you don’t want to lose more money than you are owed – whether that be in fees or by sacrificing valuable time and resources if you are chasing the debt yourself.

If you want to start the formal debt recovery process by sending a Letter Before Action we have a useful online tool to help you here.

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