Understanding collection agency fees is a good place to start.
If you want to collect the money owed to you as soon as possible then you need to hire a collection agency.
The chance of you getting paid goes down significantly as time passes. And without the help of a professional collection agency you can just say goodbye to collecting on your overdue accounts.
But before you hire a collection agency, it helps to understand how collection agency fees will apply to your case.
Understanding collection agency fees
The idea that you have to shell out money in order to get the money owed to you might seem unpleasant.
Often business owners question why they should have to pay a fee to an outside company rather than having staff handle following up with (i.e. virtually chasing) your customer. But when you factor in employee hours wasted on tasks that you did not hire them for, using an outside company makes sense.
As long as the fees add up.
The truth is, collection agency fees shouldn’t be a topic to avoid. Rather, it should be among the first things that you might want to check because if you mean business so do collection agencies.
There are many factors to consider before an agency decides on the amount of collection agency fees to be charged.
Statistically, the chance of collecting on a debt decreases after a period of 90 days so the work simply becomes harder. There is something with the three-month rule that categorically signals that a particular debt collection will be a real pain.
This is why most experts would recommend hiring a collection agency before that 90-day span.
Since it becomes hard after this period, it means that more work will be done and more work occasionally equates to more professional fee.
Another factor to consider is the amount of money that is owed to you. Consider both your total amount of uncollected revenue and how much your typical customer, client or patient owes you.
Of course you wouldn’t hire anybody to collect a debt of $10. If the money owed to you is only a small amount then you might not need a collection agency. But if the amount is in thousands then you definitely need a collection agency.
This ceiling value depends on the agency and you, since some companies may only work with you if you total amount of outstanding debt reaches their limit.
Additionally, some companies do not charge any upfront or monthly fees, and only take a portion of the collected revenue for their fees. The amount collection agency fees should just be a guide nor a hindrance in hiring an agency.
Keep in mind that you can lose more than you already have if you fail to collect on your outstanding debts.
Find a collection agency today
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Either way the choice is yours…