Is selling your debts a good idea?
Selling and buying a debt is still a relatively new concept in Aotearoa. However, at Tempest, we think it’s great. We are however slightly biased (being a company that buys debt), but let’s have a look at the pros and cons, and let you decide whether it is something to consider as part of your toolbox to deal with bad debt problems.
Let’s start with the Cons:
- You get less than the face value of the debt. Note: only in rare situations will you be able to get a debt buyer to pay the full value of your debt this can be where the debt is secured by collateral such as land or assets.
- You don’t have control over the recovery process.
- Your customer may not like that you have sold the debt.
And now the Pros:
- You can have a recovery from the debt immediately and improve liquidity for other projects.
- Let someone else deal with the disputes (if the debt is disputed).
- You get more time to get on doing what you do well…your business.
So, now that you have an idea of the potential pros and cons of selling your debts, you may be able to tell if selling your debts is a good idea or not.
Tempest is a litigation funding and debt buying firm that looks at all kinds of debts (circa $5k+ per client). Please get in touch if you would like to discuss the benefits and any specifics on how we can help be part of your toolbox to deal with bad debts and defaulting customers.