6 Best debt collection software of 2023

Recovering your payments and debt successfully requires a strategic approach and the right tools. Debt collection software equips businesses with the necessary tools to automate their collection processes, minimise manual effort, and improve debt recovery rates.

Debt collection software: Definition

Debt collection software, also called accounts receivable software, is a specialised software solution that assists firms in automating and managing their processes forrecovering outstanding dues from their customers. It provides businesses with a centralised platform to track their debt collection activities and streamline them to achieve the highest recovery.

With a host of features, including debtor profiling, payment tracking, automated communication, reporting and analytics, and compliance management, debt collection software smoothes out the collection process and assures full compliance with government regulations.

It is estimated that the UK’s debt collection software market will be worth £177.43 million ($220.62 million) in 2023, which will grow at a 9.27% CAGR to £276.39 million ($343.68 million) by 2028.

Debt collection process

While a debt collection process varies across companies, it usually begins when the client misses their scheduled payment and ends with the initiation of court proceedings if they fail to make the payment. The main steps of a debt collection process are:

Send payment reminders: Debt collection begins by sending regular payment reminder emails, messages, and emails for the first six months. The creditor firm can also offer better terms or alternate payment methods. Automate your payment reminders with Agicap.

Hire collection agencies: In case the debtor fails to make a payment, the company can solicit help from debt collection agencies or law firms. It pays a commission to these third parties on the recovered amount.

Send a letter before action (LBA): When debtors miss out on payments, they are sent an LBA detailing the amount owed and a new payment deadline, which would result in legal action.

Initiate court action: The firm can initiate court proceedings with the help of the collection law firm if the client fails to make the payment. Alternatively, the creditor firm can write off the debt and sell it to an agency/ debt buyer.

File a claim form: After taking legal action, the creditor firm must fill out a claim form, which the court forwards to the debtor. The debtor can either pay up within 14 days after acknowledging the service or file for defence within 28 days.

Await court decision: The case is automatically settled if the debtor makes the payment. In the case of an acknowledgement of defence, the case will go to trial. In the event of no response, a judgement in default is given, where the court unilaterally decides the justification of creditor claims.

Related article : what is so special about a commercial invoice?

Best debt collection software options for 2023 to streamline your debt collection process

With several dedicated accounts receivable software products available on the market, including integrated accounting software offering debt recovery solutions, selecting the debt collection software most suited to your needs can be complicated. Below, we list some of the top debt-collection software solutions and their main features.

Automate collections with Agicap

Debt collection software offers a cost-effective way to take control of your receivables management and streamline cash flows in the long run. Generally, accounts receivable software automates recovery processes by closely tracking customer payments, sending out timely reminders to late payers, and handling debt settlement agreements if matters go to litigation.

To prevent matters from escalating to requiring the need for debt collection agencies, Agicap offers receivable follow-up software that automates collection management by setting reminder tasks that work quicker than reminder letters. By accurately accounting for all invoices, it minimises the risk of payments going bad, thus reducing DSO and optimising working capital flows.

Experian

Experian offers customisable debt collection software for small businesses with several features, namely collections analytics, collections optimisation and prioritisation, and compliance regulation. Its skip-tracing features help track down untraceable debtors, enabling the implementation of appropriate collection strategies.

It's all-in-one debt recovery suite provides services across the collections lifecycle, from collection-specific scores to profile and segment your clients, automated notifications for material events, and the identification of high-risk accounts that are protected under law to stay compliant.

Experian also provides access to credit reports and non-credit data that is updated regularly. Best of all, there is no limit on the number of users per account. While it comes with flat-fee-based subscription models, companies can experience its trial versions.

Cogent

A web-based debt collection software provider, Cogent, caters to small businesses looking for an integrated collection and claim management solution. Its CogentCollect platform includes comprehensive recovery processes, including payment posting, skip tracing, and claim import and export.

Cogent’s debt-collection software seamlessly integrates with third-party systems and enables remote operations. Its unified platform easily manages customers, letters, portfolios, vendors, and payment plans and can be scaled into a full management solution that also handles bad debt litigation.

Its rule-based engine automates daily collection tasks and creates customisable document templates that can be auto-filled after sourcing information from your accounting records. Cogent’s single-window interface presents client information, account status, payment schedules, and collection activity in one place.

FICO

FICO’s debt collection software features services like early warning collections, AI-driven customer communications across multiple channels, and streamlined workflow processing. Armed with access to real-time credit and bureau scores, its platform optimises collection strategies, with over 75% of client communication automated in the pre-delinquency stages.

By employing machine learning and advanced predictive analytics, FICO’s platform extracts actionable insights into consumer behaviour. Its debt collection software is best suited for companies dealing with high volumes of outbound digital client communication.

Clearnox

Clearnox, a cloud-based debt collection software provider, deals with the optimisation of the dunning process and collections. With three different plan offerings, it offers a host of features, including dynamic receivables follow-up, automated grouped email reminders, poor payer scoring, dispute management, and activity analysis.

Clearnox enables multi-currency dunning and personalises its scenario-based services per customer. Sales representatives can also filter their reports according to personalised rules on their main dashboard.

Clearnox is also the official partner of Sage, Venice, and Winbooks, with capabilities of interconnecting with SAP, EBP, ACD, etc. You can also try out its demo version for free.

Wave Accounting

Wave Accounting, one of the most popular free debt collection software programs, provides basic accounting solutions, including payment tracking and invoicing. Its unified dashboard provides a holistic picture of the invoices due and the average time taken by a customer to pay to keep its users on track.

It has a mobile app version (for both iOS and Android), which allows for the automatic sending of invoices. Wave Accounting also has a provision to set up recurring invoices and email reminders for repeat customers. Additionally, all the receivables data gets instantly synced into your bookkeeping records.

Chaser

Chaser’s accounts receivable software automates debtor management by covering the entire receivables lifecycle, from onboarding to reconciliation. It checks the credit of customers to minimise the possibility of incurring bad debts and constantly tracks and screens invoices for any late payments, in which case personalised, automatic email and text reminders are sent to the clients.

This UK-based debt collection software provider seamlessly connects to and builds over your accounting systems with its two-way API integration tool. Its debt collection services help clients get better responses to payment reminders, with some receiving payments sooner by over 50 days.

Chaser offers a 14-day trial version, followed by three different subscription services. However, its offerings limit the number of users, with the basic version only allowing for 50 invoices per month.

What are the essential features of debt collection management software?

Ideally, debt collection management software must incorporate the following features:

• Workflow automation: Automates all repetitive tasks and sends timely payment and follow-up reminders and notifications for a streamlined debt collection process.
• Account management: Maintains a comprehensive database and account information of debtors for easy access, organisation, and tracing.

• Customisable templates: Offers letter and email templates for sending out tailored payment reminders to save time while maintaining consistency.
• Payment tracking: Comprehensively tracks payments to manage collections and monitor outstanding balances, and records payment history for easy data retrieval.
• Integration: Gets easily integrated into your organisation’s accounting, CRM, and ERP systems and other communication channels, including email, SMS, and phone connectivity, for effective debtor communication.
• Reporting and analytics: Analyses debt collection performance and reports payment and collection trends, offering actionable insights and meeting audit and compliance requirements.

See also: How to best draft a debt collection letter and how to avoid it

How to choose debt collection software for small businesses?

When choosing debt collection software, small businesses must ensure that the software’s features are in complete alignment with their needs, such as customisable templates, automated payment reminders, payment tracking and processing, and reporting.

Additionally, the software must offer a user-friendly interface that can be easily scaled as the company grows. Also, small businesses must ensure that the collection software integrates with their existing account management systems without compromising on data security.

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