When businesses struggle with unpaid invoices, debt collection in Singapore becomes necessary to recover funds. However, the process doesn’t always go smoothly—clients often find themselves frustrated with agencies, while agencies face challenges in dealing with clients.
Misaligned expectations, slow recovery, high fees, and poor communication are just some of the common complaints that arise on both sides. While debt collection is meant to be a solution, a lack of clarity or professionalism can turn it into another problem.
This guide explores the biggest frustrations of both clients and agencies and offers solutions to make debt recovery more effective.
Common Complaints from Clients About Debt Collection Agencies
Slow or Unsuccessful Debt Recovery
A business owner in Singapore hired a debt collection agency to recover SGD 30,000 from a long-time client who had stopped responding to emails and calls. The agency assured them the process would be straightforward, but after two months, there was no progress. Frustrated, the business felt the agency was not doing enough, even though the debtor had changed addresses and was avoiding legal action.
Many businesses expect quick results, but in reality, debt recovery depends on multiple factors, such as how willing the debtor is to cooperate, their financial situation, and how long the debt has remained unpaid.
To avoid this issue, businesses should ask the agency for a realistic timeline based on the debtor’s profile. They should also choose an agency with a track record of handling similar cases to improve their chances of success.
Poor Communication and Lack of Updates
A logistics company that had hired an agency to collect overdue payments from multiple clients found themselves frustrated when they could not get clear updates on the status of their cases. Weeks would pass without hearing anything, and when they finally received a report, it was vague and lacked details on what actions were taken.
Poor communication is a major complaint among businesses using debt collection services. Some agencies handle hundreds of cases at once, leading to delays in updating clients. Others lack structured reporting systems, making it difficult for businesses to track progress.
To prevent this, businesses should clarify communication expectations before signing a contract. This includes setting a reporting schedule—whether weekly or monthly—and ensuring they have a dedicated contact person for updates.
Unexpected or Hidden Fees
A small business owner, already struggling with cash flow issues, was shocked when their final invoice from a debt collection agency included a long list of additional charges—administrative fees, investigation fees, and legal referral costs. Although they were told the agency worked on a commission basis, they were not aware of the extra charges hidden in the fine print.
Many agencies do not clearly disclose all costs upfront, leading to businesses paying more than expected. This often happens when the client only looks at the base commission rate and doesn’t check the terms for additional costs.
To avoid this, businesses should request a full breakdown of all potential fees before hiring an agency. They should also compare multiple agencies and ensure they understand how much it costs to hire a debt collection agency to make an informed choice.
Unethical or Aggressive Collection Methods
A Singapore-based retail company faced severe backlash after hiring an agency that publicly confronted a debtor at their workplace, demanding payment in front of customers and employees. The debtor, feeling harassed and humiliated, filed a complaint under the Protection from Harassment Act (POHA). Instead of recovering the debt, the company found itself embroiled in legal trouble and negative press.
Some debt collection agencies resort to unethical tactics, such as public shaming, intimidation, or false legal threats. While these methods may seem effective in pressuring debtors, they often backfire and lead to lawsuits or reputational damage.
To avoid this, businesses must research an agency’s reputation and compliance with Singaporean laws before hiring. Checking for past complaints or legal action against the agency can help prevent similar issues.
Common Complaints from Debt Collection Agencies About Clients
Incomplete or Inaccurate Debtor Information
A debt collection agency was hired to recover SGD 10,000 from a former supplier, but the creditor provided an outdated address, a disconnected phone number, and no signed contract proving the debt existed. The agency spent weeks trying to trace the debtor, only for the client to admit they hadn’t updated their records in years.
Many businesses assume that once they hand over a case to an agency, the agency will handle everything. However, agencies rely on accurate debtor information—without it, the process becomes time-consuming or even impossible.
To avoid this, businesses should ensure all debtor details are current before engaging a collection agency. This includes valid contact information, signed agreements, and documented payment history.
Unrealistic Expectations About Recovery
A local construction company hired an agency to recover a decade-old debt from a now-defunct business. Despite being informed that older debts have lower recovery chances, the company expected full repayment within a month. When this didn’t happen, they blamed the agency for not doing their job properly.
Debt recovery depends on factors like debt age, debtor assets, and willingness to negotiate. Older debts are often harder to collect, especially if the debtor has dissolved their business or lacks financial means.
To prevent this issue, businesses should ask the agency for a realistic assessment of recovery chances before proceeding. They should also understand that some debts may only be partially recovered—or not at all.
Clients Interfering with the Collection Process
A legal firm hired a debt collection agency but continued contacting the debtor independently, offering alternative payment terms different from what the agency had negotiated. This confused the debtor, who stopped cooperating entirely, leading to a failed collection attempt.
Once a business hires a debt collection agency, it needs to let the agency do its job. Constant interference can undermine the agency’s authority, make negotiations harder, and create inconsistencies that lead to non-payment.
To avoid this, businesses should establish clear boundaries and trust the agency to handle communications professionally.
How to Improve the Debt Collection Process
By setting clear expectations, improving documentation, and choosing the right agency, businesses and collection firms can work together more effectively.
For Businesses Hiring a Debt Collection Agency:
✔ Ensure all debtor records are accurate and complete before handing them over.
✔ Choose an agency with a strong reputation and legal compliance.
✔ Set realistic expectations—debt recovery takes time.
✔ Allow the agency to handle negotiations without interference.
For Debt Collection Agencies Working with Clients:
✔ Be transparent about costs, timelines, and success rates.
✔ Provide consistent updates to maintain client trust.
✔ Educate clients on what is and isn’t possible in debt collection.
Conclusion
Debt collection is a collaborative process, and understanding complaints from both sides can help businesses and agencies work together more effectively. By setting clear expectations, improving communication, and avoiding common mistakes, businesses can increase their chances of recovering debts while maintaining professional relationships.
For businesses looking to enhance their collection efforts even before hiring an agency, knowing what to do in advance can help prevent many of these common issues.
