Many companies today are choosing to outsource their debt collections because either they don’t have the personnel and expertise to manage it or the cost factor involved in doing same. Hiring a collection agency ensures that your staff can devote their precious time to other areas within your company where they are better trained to do so, instead of stressing over collection calls. When deciding to hire a collection agency, ask the right questions to make the right fit for your business:
1- ARE YOU LICENSED IN ALL 50 STATES?
Just because a collection agency is licensed in your state, it does not mean that they are licensed in every state. What happens if your debtor whom, you did business with originally in your state moves to another state? Your collection agency has to be licensed in the state where the debtor NOW resides. If your agency is unlicensed and attempts to collect your debt they could face legal ramifications under the FDCPA, this would reflect poorly on your business. This is why it is important to make sure that the agency that you choose is licensed in all 50 states.
2- HOW DO YOU TRAIN YOUR COLLECTORS?
Anyone can pick up a telephone and make a dunning telephone call to a debtor, but it takes a trained professional to collect money. A true professional collector should be trained by the American Collector’s Association and continuously re-trained on all State and Federal laws and guidelines. Know who is making calls to your creditors.
3- HOW MUCH WILL YOUR SERVICES COST ME?
Many collection agencies charge on a percentage based on the amount they collect, also known as acontingency fee. This fee will most likely be based on the age and volume of your receivables. Many agencies will charge a higher fee based on the size of the debt, i.e., (if your debt is under $300.00 the contingency might be increased by as much as 15%).
4- DO YOU SERVICE MY TYPE OF BUSINESS?
It is a good idea to get a feel for what types of companies the collection agency has experience with. Have they work with your industry before? Can they provide you with references?
5- AS A CLIENT, WHAT WILL BE EXPECTED OF ME?
Typically, agencies will require the debtors name, contact information, balance due that you are requesting that they collect, any contractual agreement or signed documents acknowledging the debt and any other pertinent documentation. Any correspondence that you had with the customer regarding the balance due is very important to the agency as well.
6- HOW WILL MY CUSTOMERS BE TREATED?
It is important that the agency of your choice realizes that although you are owed money, you have a reputation to maintain and would also like to keep a working relationship with the customer. For this reason, I refer you back to #2 of this blog. The collector must be professional as well as tactful when speaking to your customers, never harassing, nor belligerent. It is a good idea to find out if your agency tapes their telephone conversations.
7- HOW WILL I KNOW THE STATUS OF MY ACCOUNTS?
Your agency should provide you with both monthly statements as well as progress reports on your accounts.
8- WHAT IF MY MAIL IS BEING RETURNED?
A good agency should have a separate “skip-tracing” department. Skip-tracing is the act in which, an individual utilizes state-of-the-art technology to find debtors that have moved from their previous known address. There are many means available to an agency to do this, such as certain programs that the agency pays for, as well as the Dept. of Motor Vehicles, the internet, the credit bureaus or merely fishing around. A good skip-tracer is like a detective, they are rewarded when they find their subject.
9- WHAT SETS YOU APART FROM OTHER AGENCIES?
Not every business is exactly the same, for this reason you need to know that a collection agency that you partner with will conform to your needs. Other than retaining an attorney to do your collections, most collection agencies will basically offer you the same services. An agency will write letters on your behalf and make telephone calls. What are their hours of operation,? Do they have extended hours? Will the agency litigate on your behalf, if needed? Many agencies will tell you that they are authorized to mark a debtor’s credit profile, but is the agency that you have chosen authorized to mark all 3 credit repositories?
10- IS IT DIFFICULT TO GET STARTED?
Even if the collection agency has answered all of your questions, they have provided you with outstanding client references and they have conformed a business plan to suit your needs, you may still be hesitant to forward your delinquent accounts to them because they require you to “jump through hoops” to do so. But in some cases getting started can be relatively quick and painless. Ask the agency how long the new client placement process usually takes, and what information you will have to provide to get started. You may be pleasingly surprised by the answer.
Statewide Credit Services (SCS) is a debt collection agency servicing commercial and consumer collections since 1989. SCS has a team of extremely talented and professionally trained collectors as well as highly skilled skip tracers and account representatives. By maintaining a commitment to excellence for over 25 years SCS continues to set the standard amongst collection agencies. Combining personal interaction and the latest technologies our customers benefit from one of the industry’s highest recovery rates.
Guided by Michelle Schwartz, Pres. SCS (michelle@statewide-credit.com) continues to earn a rating of A+ by the Better Business Bureau year after year. With an unparalleled success rate SCS has been the top choice collection agency amongst thousands of professionals around the world.
