You’ve done everything you can to get that customer to pay—phone calls, letters, offers to accept partial payment. And still nothing. It may well be time to turn this problem account over to a collection agency.
Collectors don’t use the brash, strong-arm methods often portrayed in movies. They are professionals who use their vast knowledge of collection techniques and compliance issues to help clients resolve payment issues. Collectors must comply with the Fair Debt Collections Practices Act (FDCPA), which sets boundaries for tactics and methods. And because they’re experts, collectors have a better chance of success, saving you time and effort in the process.
Collection Agency Research (CollectionAgencyResearch.com), a leading resource on debt collection companies, can connect you with qualified collection agencies in your area. To determine which one to hire, consider these factors:
- Overall success rate. This is actually more important than the amount of money an agency collects. If a collection agency retrieves a greater percentage of total past-due accounts, it will mean more money for your business. That may require a higher fee, of course, but you will receive more money over time versus a less successful agency with lower fees.
- Industry focused. You want an agent that specializes in businesses like yours. Because they understand how to work with that industry, they may have a higher success rate pursuing those types of debts.
- Two-way communication. The exchange of key information is important before, during, and after the collection process. Find out how detailed their reporting is for the collections results, how you receive payment upon collection, and other information you have to make their job easier.
- Trial and error. When you meet with several collection agencies, give each of them a few delinquent accounts and see how they perform. Judge them based on how they work with clients, the amount collected, and how quickly they remit payment. You can then select the best service.
- Observe the process. See how they conduct business. Ask to view a sample collection letter to see what they send to clients. If the agency’s offices are nearby, arrange to visit them in person and sit in on a few collection calls to learn firsthand how they do business.
- Licensed and bonded. Make sure every business collection agency under consideration is officially licensed and bonded by the state they work in, and carry Errors and Omissions Liability insurance.
Another great source for small business expertise is SCORE “For the Life of Your Business.” SCORE is a non-profit organization of more than 12,000 volunteers who provide free, confidential business mentoring and training workshops to small business owners.
To learn more about the local chapter of SCORE, visit www.MidFlorida.score.org .