Few Things You Must Know About Collection Agency Services Before Choosing One
Posted: Jun 10, 2019
If your bad debt has been piling up relying on your in-house team to recover those may be a risky option to explore. There are two things you should keep in mind – the problem tends to grow exponentially at every level and secondly it can start hurting your operations sooner than you think. The rise in bad debt also creates a liquidity crunch in your business. If your cash flow isn’t good and falling to levels near your operational expanses you have troubling times ahead. You can avoid all that by opting for professional collection agency services.
A commercial collection agency would take over your debt collection process completely and let you focus on the core areas of your business. From tracing your defaulting clients to applying different levels of pressure and persuasion they do all it takes to help you recover your bad debts. That said choosing a debt collection service isn’t surely a walk in the park. There are too many of them around and you can always make the mistake in your choice. Here we look at some of the things you need to know about collection agency services before hiring them –
- Operational Territory – A commercial collection agency requires license to operate and they have to have licenses from different states to operate their services. Thus you should start by knowing the operational territory of these agencies. If your defaulting clients are in a different state or you expect them to have moved to a different state you must choose an agency that is licensed to operate in these states.
- Professionalism – Your aim would always be to hire a team of professional debt collectors and not a gang of goons. You can invite legal trouble in terms of lawsuits if you work with agencies that invade into people’s privacy or violate their rights. Debt collection is a highly challenging business where agencies need to apply pressure on defaulters and at the same time not violating any of their rights.
- Skip Tracking – The odds of some of your clients becoming untraceable is pretty high. In fact most defaulters do everything from changing their addresses to phone numbers in their attempt to avoid payments. Skip tracing is the most effective way of locating an individual or groups. Here companies with access to multiple databases can locate clients and pressure them to pay up. You must make sure the
commercial collection agency you are hiring has access to the latest skip tracing tools.
- Collection Fee – It is important for you to know the formula the agency uses to calculate its fee. There are some agencies that would charge you on a fixed-fee basis while others work on a no collection-no fee basis and charge you a percentage of the amount collected. Both these models have their pros and cons and you need to choose one that maximizes your collection and costs you less.
It is important for you to keep these things in mind when it comes to hiring collection agency services. When you get your choice right the agency would bring expertise into the job and would improve your cash flow in quick time bringing it back to its operational peak.
About Author: Donald Benson spent two decades working with companies offering debt collection service to small and large businesses. he is a regular blogger who writes on collection agency services.
Donald is the owner of a collection agency and is a regular blogger on collection agency services. To know more about debt collecting agency, read his articles and blogs.