Let’s face it… the #1 reason for outsourcing your collection headaches is because your staff lacks the expertise to be really successful at collecting what’s owed to your business.
And when you factor in the ever-changing landscape of State and Federal collection laws why add potential liability issues with possible failures in compliance.
So it’s really not a matter of whether or not to hire a professional collection. Rather, it’s about how to find the right one for your business.
7 Must-ask questions when selecting a collection agency
Before you hire a national collection agency here are seven questions to help you select the best one for your situation.
1. Are you licensed in all 50 states?
Though this questions is not so important if you work with a regional or collection agency for your state only, it is very important when selecting a national collection agency. That’s because collection laws apply to your state as well as every state where your customers or clients reside.
In fact, some metro areas (like New York City) require collection agencies to be licensed for their city as well.
In other words, when you need to collect from existing or former customers you need a collection agency with the appropriate licenses for each and every location where you need to collect outstanding revenues from.
And if some of the people who owe you money have moved hiring a collection agency with a national “reach” is the only way to go.
2. How much insurance does your firm have?
The reason for selection a collection agency with the appropriate insurance is because should one of their employees violate state or federal laws they should handle any potential liability issues filed by your customer(s).
At the end of the day, you don’t want to be on the hook for liability issues because the company you hired made a mistake during the collection process.
And by selecting a company with adequate insurance you can be sure you’ve found a professional company worth hiring that minimizes your overall risk-exposure.
3. What is your success rate for my type of business?
It almost goes without saying that you want to find an agency with a track record of success.
Though in many cases you won’t be able to recover 100% of what’s owed, you still want (and need) to recover as much as possible. So when talking with collection agency ask them about their track record of success. And then ask them how successful they have been in collecting debt for companies like yours.
For example, have they worked with businesses in your niche/industry before?
And if so, do they still have current clients that you can speak with regarding their results, as well as testimonials you can review?
4. How will you contact my clients/customers?
For some people the image of the rude, threatening collection call is enough to make them think twice before hiring a collection agency.
And though I’m sure there are still some fringe operators out there who skirt or ignore collection laws, the vast majority of professional firms collect your debt by using proven strategies that are fully compliant with collection laws.
What does that mean to you?
Collecting debt on your behalf doesn’t mean that your former or existing clients or customers are badgered or threatened. When it comes to collections you can consider asking what methods the agency will use to recover lost revenue on your behalf.
If they use collection letter you might want to review them. And how will they contact your customer or client by phone?
Any professional agency will have detailed phone scripts that their employees follow when calling, as well as an established protocol that their employees follow in their collection efforts.
5. How often will we need to communicate with one another?
Establishing a good working relationship is based, in large part, on understanding what each party requires of the other.
For example, the collection agency will no doubt require information regarding your past due accounts that are on the book now, along with an established procedure for getting new delinquent accounts to them so they can begin the collection process.
For new accounts, how soon in the process do they recommend you notify them?
Additionally, you will want to be able to follow their progress as well. Will they provide you with monthly statements? Do they offer online access so you can track their progress in real-time? Is there a single point of contact you’ll be dealing with at the company?
Getting answers to all these questions will help to define your working relationship up front.
6. What is your fee structure?
Knowing what their collection agency service will cost you makes sense.
Many collection agencies will charge you a percentage based on what they were able to collect on your behalf, which is called a contingency fee. Bottom line, if they don’t collect you don’t have to pay.
However, the actual percentage rate is based on the volume and age of the account.
What’s more, many collection agencies offer additional services such as skip tracing, that will not be covered by their contingency fee. So, should you want or need any of these add-on services be sure you know the overall cost to you in dollars and cents.
7. How do we get started?
Okay, so you’ve finally found the right agency.
Now… how do you get started?
Ask them when they can get started and what will be required from you to get the process moving along. Also, is there any paperwork that needs to get taken care of before they can begin working on your behalf?
Time is money, after all, so when you finally find the right agency make sure they can get started working for you right away.
Find a national collection agency today
To find a collections agency that specializes in helping business likes yours, simply request a free services quote from qualified and reputable companies.
Click the link and compare free collection agency quotes today.
This way you can save time, money and aggravation by hiring a professional who can help you collect some (or all?) of your outstanding accounts receivable.
After all, when you get down to it you really have two choices:
- you can keep doing what you’re doing (and hope for a different result), or
- you can find a commercial collections agency that can help you recover what’s rightfully yours.
Either way it’s your money… you decide.