Common Misconceptions About Selling Your Debt

Receivables management companies can offer lenders flexible options on the way you deal with past-due or charged-off accounts. There are some common misconceptions about how they can help you which need to be dispelled.

Myth #1

Selling your debt leaves money on the table

A big misconception is that by selling your debt you are not going to maximize the value of your debt, but that does not take opportunity cost into consideration.  Most companies have a dedicated collections team which deals with their accounts – performing and past-due. Often times, the efforts expended to manage the delinquent accounts undervalues the operational resources required. By selling your aged out accounts, your team can focus on performing accounts, preventing more of them from becoming past due. By selling the accounts that are not worth your team’s effort, you can obtain flexible capacity, as well as re-deploy monetized value into your core operations which should generate higher returns.

Myth #2

It’s better to recover these assets in-house no matter how long it takes

Another misconception is that tasking your inhouse collections team with chasing accounts that have become stale is the most efficient and effective way to recoup funds and maintain complete control of the account. But what is the cost of that control? Freeing your resources by selling these accounts provides liquidity that can be redeployed to generate higher returns.

Myth #3

External agencies use aggressive collection techniques

This misconception comes from a storied history within this industry, one that is no longer the case.  That being said, once you have decided to outsource the collections it is important to do the research and due diligence to ensure that the debt purchaser has the reputation of protecting your brand and treating your customers with respect. By selling your debt to a receivable management company, they can offer longer-term or more creative solutions giving the customer a more positive experience. Receivable management companies can protect your reputation and even return customers to you, once their credit is rehabilitated back to your adjudication criteria.

Myth #4

If the buyer of my receivables doesn’t follow regulations, I can still be held accountable

When you sell your debt to a receivables management company, you sell the legal and regulatory responsibilities for those accounts as well. Selling your debt alleviates your credit bureau reporting and collection compliance responsibilities.

The Wrap

Managing your receivables is an important part of business, just like other assets. Receivables should be managed properly, and it can sometimes be a difficult task to manage internally.

Outsourcing your debt recovery can offer some smart and timely alternatives. Canaccede Financial Group is the largest multi-asset acquirer in Canada. we provide both debt servicing and purchasing solutions. Our expert valuation team can work with you to size the debt recovery potential for your organization. If you, or someone on your team, would like to find out more, please contact us at .

To find out more about CFG and how we can help, click here .