Choosing the right debt-collecting agency can help small businesses combat a tough financial climate, according to a new report.

The report, by Debt Collection Agency, STA Graydon, outlines that, with continually increasing interest rates, it is crucial for small businesses to exercise good credit control.

With increased pressure on borrowing, the burden of late payment can have disastrous effects on a company’s cash flow.

The group found that 56 per cent of small businesses choose to consult a debt collection company in 2003 due to such uncertainties.

With so many businesses in the debt collection market place, the choice of partner can prove a difficult one.

Colin Thomas, Group Managing Director at STA Graydon, said: “By asking the right questions when choosing a Debt Collection Agency, small business owners will find a company who can service their individual needs and deliver optimum cash-flow and increased profitability for the business concerned.

“Healthy credit control goes a long way to help protect a business from the effects of external economic pressures.”

To help small businesses make the right choice, the group have supplied the following advice:

  • Check if they are members of the Credit Services Association – the body created to uphold the highest professional standards. This can be done through the organisation's website http://www.csa-uk.com/
  • Agree a rate of commission for pre-legal collections, dependent on the size and age of the account. The better collection agencies will always operate on a no collection, no commission basis
  • For speed and consistency purposes, select a collections agency that is linked to a solicitors practice
  • Should your chosen agency be linked with a credit information provider, they will have additional leverage because of the debtor’s desire to optimise, rather than compromise their credit rating
  • Request references that you can contact to get user feedback