Tips for Hiring a Business Collection Agency

While companies always have the option of collecting debts on their own, and doing it manually, it is always smart and more cost-efficient to hire professionals to do the job. After all, your business and your expertise is not debt collection, and trying to get people to pay will drain your resources. It would be much better use of your time, manpower, and money to focus on your business, leaving debt collection to a business collection agency.

However, the problem is that not all collection agency services are created equal. As with any industry, there are subpar firms or those that do not deserve to be in the industry. The challenge therein is finding the right business collection agency. Here are some tips that will help you along the way:

Do Your Research

It is a given that you need to do basic research just to see if you are going to hire a legitimate company or not, but even if you find a legitimate and established company, you still need to spend a little bit of time finding out which areas the debt collection agency specializes in. Different firms have different specializations, for example – some excel in securing funds from small businesses or individuals, while some firms are better at getting large companies to pay up. Find an agency that is well suited to your debt collection needs.

Find Agencies That Use Skip Tracing

If you want an agency that can really collect on your debts, find ones that can use what is known as “skip tracing,” which is used for when debtors decide to skip town. A collection agency that can use skip tracing has access to databases that could lead to the current location of a debtor with no forwarding address.

Only Consider an Agency if They Have Insurance

Regardless of how professional a debt collection agency is, there is always a chance that the debtor will feel that they are being harassed, and in some cases they will sue. Whether you win or not, you still need to ensure that you won’t be liable for what the agency did. So ask for proof of insurance from an agency so that you will know you are protected in case the debtor takes both of you to court. The kind of insurance you should look for is called “Errors and Omissions Insurance.”

Lastly, Consider Costs

Of course, even if you finally winnow down your list into a handful of excellent and legitimate agencies, you still need to choose one that offers the most affordable rates. One thing you need to consider is the form of payment for their services: there are flat fee rates that are straightforward and fixed regardless of how much they are able to collect, then there are contingency rates that function under the “no collection/no fee” principle. If they don’t collect, they don’t get paid but if they do, they get a percentage. This form of payment is ideal if you are not sure that the agency will be able to collect.

Author Bio: Joan Geller is a former debt collections specialist for a top business collection agency, who has written numerous guides related to the finance industry. These days, she works as a consultant for a collection agency service, where her experience is put to good use in streamlining protocols.

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