The Europeans are known for the passion to enjoy everything life has to offer.
In Spain, this is true about their 3rd party collectors as well.
While the last couple of years the Spanish economy is peaking up, the last decade or so wasn’t easy. The unemployment went drastically up (up to 30%), businesses went bankrupt and many others started to fall behind on payments.
In Spain, the payment terms are historically long and can be almost double versus the US average (net 90 or 120 are common).
Collections in general and 3rd party collections agencies experienced a surge in demand for their services.
In that culture, they had to get creative to collect the debts. So, they have decided to suit up, put a tall hat on, get a black car that says “COBRADOR” – a collector, and drove around. People would never want to have this car parked next to their home or a business, so they would pay up. In fact, this tactic was so successful that one agency claimed 70% recovery rate.
Other collectors chose different costumes and claimed to have increased results as well.
While some people found this tactic as aggressive, it was compliant with the local debt collections regulations. This part is very important if you are looking to hire 3rd party collections agency.
Another important thing to remember is that 3rd party collections should be used only as a last resort, as they aren’t cheap (up to 50% of your invoice) and probably will end your relationship with the client.
Invoice and debtor tracking is a great way to reduce the number of invoices to be passed to 3rd party collections. Try Gaviti receivables automation 30-days free.