Not all debt collection agencies are created equal. Before you entrust your company’s financial stability to a particular collection agency, it is important to consider a few important details before you choose one.
Being a service provider has its own perks and disadvantages. You build long-term relationships with loyal clients; however, at the same time, you suffer due to customers who cannot pay their bills rightfully and in a timely manner. If you are sick and tired of making phone calls to your debtors who are repeatedly ignoring you, then now is the right time to consult professionals. Debt collection is usually outsourced to third-party institutions which are composed of lawyers and paralegals who conduct the follow up and negotiation between the customer and the service provider. This might be the answer to your long-time nightmare and severe headache but you also have to consider that you have to contract the most suitable debt collection agency for you.
Verify the collection agency’s reliability.
The most important thing to do before you hire a third-party collection agency is to verify their reliability. You can ask for referrals from other business owners or friends who are accountants or lawyers. The closer a collection agency gets to your network of contacts, the more reliable it can be because you will always have a fall back or means to get back to them in case that you are having trouble negotiating with the collection lawyer. You would also want to check their reputation and quality of service to their previous clients. Start by doing a search on Google and check out press releases, testimonials, and ratings given to a debt collector you have shortlisted.
Check if they are authorized debt collectors.
Another thing to check is their affiliations and associations to state-wide or nationwide recognized organizations for verification of their identities as authorized debt collectors. If a debt collection agency is a member of Better Business Bureau or BBB, then you are assured that that organization follows state laws pertaining to consumer protection acts and anti-harassment law. Examine the guidelines and protocols followed by these organizations and from there, decide whether it fits your company’s ideals and values. If your debt collector is affiliated with reputable organizations, then you are assured that their staff members are well-trained and updated on important skills and strategies in collecting debts. If you are not able to deal with a licensed debt collection agency and still proceed with their services, your company will be held liable to collection laws.
Determine the payment structure.
Ask about their fee structure. Debt collection agencies vary in terms of their payment structure. Some would make a deal that your payment for their services would be a certain percentage on the total amount collected for each client. Others require an upfront downpayment before they begin with their process. Choose whatever fits you but make sure that your chosen debt collector is insured in case an unwanted circumstance happens. If you are quite confident that you can collect at least 80% of the debts owed to you by your subscribers, then it would be more practical to just settle the initial payments to the debt collector. Percentage commission can only be advantageous to you if you are doubtful that you can collect at least half of what you have invested to provide your client’s services.