If your business model involves regular monetary exchange with your customers, you are sure to have some bad debts where customers haven’t paid you. This accounts for a substantial loss for many businesses. A debt collection agency is your best bet to recover delinquent receivables. A collection agency helps you settle old accounts without going into direct confrontation with the customers whom you might want to retain. There are a few things that you need to keep in mind while planning to hire any service from a collection agency.
Things You Should Know :
Methods – Make sure you hire a professional debt collection agency and know the exact methods that they use in recovering your late accounts and old debts. They should professionally approach your customers instead of threatening them with foul language. A good agency will have debt collection strategies that they commonly use and should be able to explain these to you clearly. They should have different strategies to deal with different customers depending upon their response. They should be experts about the Fair Debt Collection Practices Act.
Portfolio – Ask for their portfolio and see the businesses and firms they have helped in recovering debts. Try to get feedback from these firms about the success rate of debt collection. This will also give you a fair idea of their experience in debt collection. Check out if they have handled cases of your nature in the past which shall be an added advantage on their part. If a collection agency doesn’t have an impressive portfolio it is time for you to look elsewhere. Don’t risk your brand name with an unprofessional collection agency.
Educated Workforce – You need to hire a professional debt collection agency which has an educated workforce not a bunch of bullies. There are hundreds of debt collection agencies around which hire overly aggressive debt collectors and invite legal problems. You need to make sure the agency also has legal experts to ensure they can recover your debts successfully. There are times when debt collection might invite litigations and the debt collection agency must be competent in handling these situations.
Fees – You need to research what fees may be involved that the debt collection agency may charge to collect your late and past due bills. You can opt for flat fee debt collections where agencies charge you a flat fee versus other agencies who charge a percentage of the recovered debt; this is called contingency debt collection. You can choose accordingly based on your own judgment. If your recovery amount is large selecting a flat fee model will cost less.
Reporting – You need to keep track of the progress debt collection agency makes in recovering your past due accounts. Ask about the methodology they will use in reporting. Although a debt collection agency is not directly related to you or your company, you will need to keep track of their work to ensure that at no stage during recovery they damage your reputation.
These are the important things that you need to keep in mind while choosing collection agency services. This will ensure you recover your old debts easily without inviting any legal trouble.
Summary: There are a few important things one needs to know about collection agency services. It includes their methods, workforce employed, fees and mechanism of reporting.