How Contingency Fees Benefit Debt Collection Clients

How Contingency Fees Benefit Debt Collection Clients

Businesses across the country often find that they are struggling to maintain their bottom line while hoping to collect on old accounts. Sending these accounts out to a nationwide debt collection firm can be a great help, but the concern will always be how much the service costs, how much it can collect, and how long it will take. Generally, however, debt management law firms offer contingency fees that help new clients onboard with confidence, understanding that the firm will continue to collect until the job is done. Take a look at why contingency fees are a good solution for national debt collection clients who simply want to be paid what they are owed.

An Explanation of Contingency Fee Structures
How are contingency fees structured for commercial debt? Generally, contingency fees are set up as a percentage of every dollar collected on delinquent accounts. Fees typically range from 20% to 50%, but that depends on the negotiation that takes place between the client and the firm.

As a result, debt management/collection clients benefit because they have:

• No upfront costs when signing a contract
• Access to legal support without a massive retainer
• They know the law firm is incentivized to succeed
• They do not face any extra risk if collections are not successful

With no upfront costs, the client need not stroke a large check to get started. This eliminates the need for a traditional retainer that attorneys often require before services begin. Plus, struggling businesses are not asked to give up what little cash they have to collect on debts that are dragging them down. When clients sign a contract with a professional collection law firm, even with contingency fees, they gain access to support from the firm’s legal team. This helps the business better understand any recourse it may have with particular clients, how much it should negotiate, and how to structure contracts for partial payment and/or resolution of certain accounts. The only concern for the client is what percentage they will pay when funds are collected from delinquent accounts.

Cost Savings and Risk Reduction for Clients
Commercial debt collection clients are looking to save money, get their money back, and reduce risk at the same time. Yes, any business runs the risk of seeing accounts go delinquent. Clients ghost their vendors from time to time, and this can cause cashflow issues that need to be addressed as soon as possible.Working with a nationwide commercial debt management firm helps reduce risk because the legal team is soliciting delinquent clients, utilizing the resources they have at their disposal, and negotiating settlements that benefit everyone. Yes, consumers have rights, but business owners have rights, too.

Remember, because the client is only paying a contingency fee on every dollar that is owed, they can easily calculate how much it will cost to collect on every dollar. This allows for easier budgeting, and it also helps the business set expectations because they likely have an idea of which account will be easier/harder to collect on. Moreover, the client does not need to worry about paying the law firm back if the economy should shift. The law firm is taking its contingency fee out of any payments that are received, simplifying the process for both parties.

At the same time, the client’s staff are free to focus on the work they must complete every day. Yes, an account manager may have a delinquent customer, but they must continue to generate business so that the company can operate. Taking debt collection out of the staff’s hands and putting it in the hands of a debt collection firm saves man-hours that are often wasted because account managers and accounting staff are not trained and experienced debt collectors.

How Contingency Fees Align Attorney and Client Interests
Any form of consumer debt collection requires alignment between the client and the law firm’s interests/understanding of the situation. Generally, contingency fees help align the two parties because they both understand how much money is at stake. The law firm knows how much it can make with these fees in place, and they have set the client’s mind at ease by only charging so much money, forgoing a retainer, and still offering support.

The client gets the peace of mind they deserve because it has likely been taxing as they have attempted to collect on these accounts. Plus, all questions can be answered as the process unfolds, but most importantly, the client is free to negotiate settlements with delinquent customers given the backing of the law firm they have chosen.

Reach Out to National Collection Lawyers Today
You can reach out to National Collection Lawyers today if you need assistance with a range of delinquent accounts. These consumer debt collection services alleviate stress on employees, help improve cash flow, and reduce risk while cutting costs for the client. Seeking the support of a licensed debt collection law firm is far simpler than cold-calling old clients when you should be focusing on running your business.