Posted On: April 13, 2021
The United States’ overall mortgage delinquency rate was 5.9% in November 2020. And it’s not just mortgages that are going unpaid. In every sector, people are failing to make their payments on their debt.
As a business, you know how detrimental unpaid bills can be. It can undercut your margins, wreak havoc on your cash flow and cause you to consider raising prices and cutting expenses.
Perhaps you need to consider working with a collection agency. Read on to learn how to hire a collection agency that will serve your best interest and protect your good reputation.
Menacing threats and middle-of-the-night phone calls are not the methods top debt collection agencies use. In fact, these tactics go against the Fair Debt Collection Practices Act.
You want to protect your relationships with your customers. That is why it is important to know how to hire a collection agency.
These days, a good debt collection agency will find ways to make it easier for delinquent customers to pay.
Often, they offer multiple payment plans and various channels. Also, early intervention can prevent a bigger issue. Top collection agencies will help mitigate risk through pre-collection measures, like sending out payment reminders at regular intervals.
When you are on the hunt for the best collection agency, be sure to look for a company that will work with you to leverage your in-house processes.
Make sure that the account collection services you look into are making contact with debtors from a domestic office. This is not the area of your business you want to be outsourced.
Focusing on partnering with a collection agency that prioritizes your delicate relationship with your customers is the best way to protect these fragile relationships now and in the future.
A collection agency will contact customers on your behalf. That is why it is vital to choose account collection services that are reputable and professional.
The way they treat your customers could hurt your image.
One of the best ways to be assured that you are hiring the best collection agency is to partner with an organization that has credentials to prove its reputation.
For example, look for a company that is accredited by the Better Business Bureau. Accreditation by the BBB means that the business meets strict standards, including a commitment to resolve customer complaints.
The BBB has a database of complaints and ratings for businesses based on feedback from consumers. You will want to review the rating, comments, and complaints about any agency you are considering partnering with.
Another option is working with companies that are members of ACA International. ACA International members must adhere to specific standards.
Under collection agency laws, agencies must be licensed to practice in the state in which they are located.
You should choose an agency that is licensed or bonded in your state, as well as in the states where your customers reside.
If your customers are all in-state, a collection agency with a state license is sufficient. If you have national customers, on the other hand, you’ll need an agency that is licensed in all those states, too.
Also, be sure that your collection agency has errors and omissions liability insurance. This type of insurance protects them from complaints such as harassment. Often, this coverage extends to your business, too.
Many collection agencies focus on a certain industry to become specialists. Such as healthcare services, credit cards, insurance, and so on.
If your business is B2B, then an agency that primarily deals with consumers will not be a great fit.
If you are in a specific niche, you may want to consider the specialization of the collection agencies you are researching.
When shopping for the right collection agency for your business, don’t just compare prices.
The collection percentage an agency takes is just one factor to weigh. In fact, what is most important is how much money you will get into your coffers.
This will depend on the results an agency is able to achieve.
You’re better off with a collection agency that has a higher fee rate and better recovery rate, versus a collection agency with a low fee rate and a low collection percentage.
When looking for the right agency for you, be sure to ask for an industry analysis. This will allow you to compare their results with other established agencies.
Ask all the collection agencies you interview how often they report collection rates.
It is common to expect a monthly statement and payment. The top agencies also offer an online portal where you can log in to see recovery rates whenever you choose.
Partnering with the right agencies can make a big difference to your cash flow. That’s why it is vital to select the right partner that will get you the best results.
There you have it! After reading this article, you now know that a collection agency is an extension of your business.
Consider your unique needs, your industry, and the specifics of each agency you research. One with a solid reputation and a proven track record of success will ultimately lead to your success as well.
At Nationwide Recovery Systems (NRS), we are a nationally recognized Accounts Receivable Management Company providing services to the Healthcare, Commercial, and Consumer industries.
We take pride in the over 2 billion dollars we have collected. Due to these efforts, our clients have been able to reinvest these reclaimed dollars into their operations.
Contact us today to learn more.