Debt Collection Agency: Important Points To Consider When Hiring

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Debt Collection Agency:
Points To Consider For Your Business

To manage a establishment profitably, a part of your policy should include knowing when to outsource difficult accounts to a debt collection agency. Every owner has to stay on top of their receivables and check their cash flow. Whether you sell a product or provide a service, you probably experience late-paying or none-paying customers from time to time. That means that you have to have a good, uniform internal debt collection policy in place.

One significant reason this is true is because your delinquent accounts continue to decrease in value, at a rate of 15% per month. And the longer an account goes delinquent, the more difficult AND costly it is to collect. In addition to spending more time, capital and resources going after these depreciating accounts, its also costing your company in lost opportunity dollars, by taking you away from your core revenue-generating functions. It is much more cost effective and efficient to outsource these problematic accounts to a unbiased third party debt collection agency.

Here are three important tips to bear in mind when hiring a debt collection agency.

Licensing

When hiring a debt collection agency, you need to make sure they are licensed in the state(s) where your debtors are located. Since collection laws can vary to a great extent by state, its to your advantage to look at collection agencies that are accredited nationally. Since we live in such a mobile culture, and with people moving across state lines a lot, its better to know a debt collection agency that is accredited in all states are familiar with all the special laws and regulations. In fact, collection agencies can only collect in the states they hold a license in.

Costs

Fee structures can vary greatly with various collection agencies. Some offer prepaid, flat fee arrangements, as others charge a percentage of any monies recovered, normally with no upfront costs necessary. Still others can offer some combination of the two. Depending on your establishment, there are advantages to either situation. While there are upfront costs with flat fee based debt collection agencies, you can save a lot of money in the long run, as the collection costs tend to be a fraction of the total dollars collected.

As your costs are unchanging, you can also turn over problematic accounts earlier, when there's a better chance for collecting your money. Again, the longer you delay, the more difficult it is to collect.

Yet, a lot of companies decide to give up a percentage of whatever might be collected to avoid the upfront dollar costs. Be sure to compare rates though: a debt collection agency can charge anywhere from 20-50% in contingency fees. One thing to keep in mind though: while you might be encouraged to seek out the lowest fees, you should also know that if the fees are very low, it can mean the debt collection agency has inadequate personnel, time and resources that they will give to collecting your accounts. Whereas percentage fees charged are notable, success in total recovery is far more significant to your company bottom line. Whichever option you choose, make sure the debt collection agency you're considering spells out their fee structure clearly in writing.

Collection Agency Business Practices

Finally, when considering a debt collection agency, you need to think of them as an extension of your establishment. In view of the fact that they will be collecting your money and acting on your behalf, its main that they imitate your establishment's viewpoint. For instance, if you manage a medical practice, your standing in the community is something you esteem. You wouldn’t want to affiliate with a debt collection agency known to engage in ruthless, intimidating and/or inhumane behavior when handling patient collections. At the same time, you want a collection agency that while diplomatic, they are resolute, uniform and consistent in their collections activity.

Collection Agency Quote Request

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What services are you interested in?*

	Bank/Credit Union Collections
	Commercial Collections
	Consumer Collections
	Medical Collections
	NSF Check Collections
	Debt Portfolio Scoring Analysis

Total dollar amount of accounts?*
Total dollar amount of accounts?*

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Additional or Standalone Services

	Credit Reporting Services to 3 Bureaus
	Consumer/Commercial Credit Check Services
	Debt Portfolio Scoring Analysis
	Skip Tracing Services
	Electronic Check Deposit (eliminate bank trips to deposit checks)
	Check Guarantee Services (never get burned with another NSF check)
	e-Merchant Terminal (accept credit/debit cards online, and remotely with any cell phone)
	Lower your Visa/MC/Debit Card processing fees.....Guaranteed!

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Debt Collection Agency: Points To Consider For Your Business

Licensing

Costs

Collection Agency Business Practices

Debt Collection Agency:
Points To Consider For Your Business