When clients neglect to pay their bills, it can have a big impact on your business’s success rate. Hiring a reputable debt collection agency can put some of those past-due balances back into your budget. Ideally, the collection agent you decide to work with should be able to effectively collect from late accounts without damaging your reputation with your customers.
Selecting a debt collection partner is a serious decision — the right choice will help protect your business and ensure you thrive for years to come. Check out the top factors you should consider before you can choose the right debt collector for your company.
The Benefits of Using a Collection Agency
When using a collection partner to retrieve debts from clients and customers, you can experience many benefits over having an in-house department. Some advantages to choosing a collection agency include the following:
- Industry experience: Debt collection agencies specialize in retrieving debt, requiring them to know the best methods and strategies to return their clients’ money. They know the industry and its challenges and have dedicated their time to determining the best ways to solve them. Agencies also have the resources and tools to provide the best care, including legal experience and connections.
- Efficiency: Because debt collection agencies have more experience and expertise, they can more efficiently retrieve debt than an in-house team. Debt collection agencies know the strategies to optimize their time with your business, so you can quickly receive your money and skip tracing and phone calls. Their ability to please their customers impacts their reputation, making it in the agency’s best interests to work efficiently.
- More advanced technology: Debt collection agencies have more freedom in their budgets than in-house debt collection departments. In-house departments only have the funds they receive, with the main portion of budgets going to support your business’s operations. Debt collection is the main function of debt collection agencies, letting them invest in new technology, resources and training to provide clients with the best care.
- Lower staff costs: Maintaining a permanent debt collection department in-house can become costly. Your budget must support daily operations and needs, from labor costs to tools and resources, which can become unnecessary if you have no current debts to collect. Instead, you can hire a debt collection agency as needed, only costing the fees and rates for their services.
Using collection agency services can support the needs and functions of many businesses, saving them money and providing the best debt retrieval services from dedicated professionals.
How to Choose a Collections Agency
When trying to find a collection agency, you should know what criteria to assess for each potential partner.
1. Professional Credentials, Licenses and Insurance
Professional organizations uphold the standards and ethics of the debt collection industry, and member companies agree to abide by the best practices established by the organization. Look for a firm with accreditation from the International Association of Commercial Collectors, the Commercial Law League of America, the Credit Research Foundation, and other industry watchdogs.
You should also make sure the debt collector you’re considering has the proper licensing and credentials to practice legally — laws require collection agencies to have a license to operate. If your company is located in one state and only deals with other in-state companies, a collection agency with a local license is sufficient. If you operate nationally as a company, you’ll want to confirm your chosen debt collection agency has licenses to operate in all relevant areas.
Collection agencies should also have insurance to protect themselves and their clients against lawsuits and legal action. If debtors feel actions against them were unjust or violated their rights, they can sue your company and collection agencies. By checking that collection agencies have insurance and the types of protection they have, you can keep your finances and reputation secure throughout your partnership.
2. Track Record and Reputation
Check with the Better Business Bureau to see whether an agency has received consumer complaints and how — or if — these complaints were resolved. You want to work with a collection agency that is supportive, responsive to clients, and puts in the time and effort to provide a seamless customer experience.
You should also see if the company can provide references from other satisfied customers. Previous clients offer an honest and practical assessment of what it is like to work with an agency. Reading online reviews and testimonials will give you a good picture of a firm’s reputation and success rate. Consider their experiences to determine if they’ll be the best collection agency for your business’s needs.
As technology advances, the capabilities of many debt collection firms have increased. Look for a firm that offers features such as automated collections, credit and risk scoring, online payments, robust tracking and metrics, and smart outreach. These advanced elements will benefit your company’s bottom line as agencies that rely on the latest technology have a better chance of collecting the long-overdue debt.
Choosing a debt collection agency with cutting-edge technology also allows you to stay more organized and keep track of your company’s finances. Whether you have a small or midsize business or you deal with hundreds of thousands of clients a year, working with an agency that has the right technology provides easy access to all the information you need online.
Debt collection agencies typically charge a percentage of each account they successfully collect. Fees vary depending on the age of the account in question, the amount of debt, and other factors. Most agencies have a tiered pricing structure and do not charge for their services unless they’re successful. Make sure you get the fees and payment terms in writing before making an agreement.
When weighing price, you can also consider the payment methods a collection agency uses. Most use either a flat fee or a contingency charge for their clients. A flat fee is a one-time expense that you pay before the collection agency can begin tracking down your clients and customers. Alternatively, a contingency fee is a percentage of the debt collected that you will pay upon successful retrieval of the debt. Each case and agency will have different contingency rates depending on the circumstances.
How much it costs to hire a collection agency depends on which method you choose. Contingency rates usually have higher percentages but also ensure you will only pay something once the agency retrieves the debts. Flat rates are often lower rates, but you must commit to them and pay upfront, which can be daunting for many companies.
When you’re considering the price of a debt collection agency’s services, remember to factor in the return on your investment. Keep in mind how much money they’ll put back into your pocket by collecting on your debts. Consider both their fee and recovery rates to determine the money you’ll get back before making a major decision.
5. Standards and Values
As a business owner, you know the importance of maintaining your integrity and gaining your clients’ trust. Debt collection can be a challenging field. If you need a debt collection agency’s services, you want to make sure you find a company that takes its responsibilities seriously.
Evaluate the company’s reputation and culture to determine if it’ll be a good fit for your business. Look through their client reviews and testimonials to see what you can learn about their standards. Do they seem like a reliable business that would in turn ensure your company looks good? Hiring a company with inadequate values or practices can reflect poorly on your business and impact your clients’ perspective of you.
A debt collection agency that holds itself to high standards and inspires confidence with a professional atmosphere is more likely to be a reliable partner than one that doesn’t provide a good first impression.
How to Work With a Collection Agency
Before signing a contract with a debt collection agency, you can develop a plan for collaborating. Working with a debt collection agency should be a collaboration. While the agency will know how to best retrieve funds, they are functioning under your name and in your best interest. Their methods should align with your values and uphold your reputation. Together, you can determine which methods you would like to deploy with professional advice and experience.
Additionally, you should discuss communication standards and methods. Establish a point of contact and determine how frequently and via which method you want to receive updates and information about cases.
Find the Best Collection Agency and Services With Altus
Businesses all over the world trust Altus Global Trade Solutions for legal, professional, and effective debt collection services. We are nationally and internationally accredited, and our smart recovery solutions can help improve your cash flow and your overall bottom line. Call 504-471-0948 or place your accounts to get started today.