Choosing The Best Debt Collection Agency: A Guide
Photo from Unsplash
Originally Posted On: https://ffcc.com/blog/choosing-the-best-debt-collection-agency-a-guide/
There’s nothing worse than clients who fail to pay their dues, especially when your business is in the financial doldrums. If that’s the case, you have two ways to handle the matter. You could let your clients go scot-free and embrace your loss or hire a debt collection agency to do your bidding.
If you’re like most business owners, you’re not too excited to refer your clients to debt collection firms. However, considering 82% of small businesses fail because of cash flow issues, they’re your best bet for survival.
Picking out the best debt collection agency from the myriad of options can be a tad challenging. With so much at stake, you can’t afford to get the right agency for your debt collection. If you’re having trouble picking a debt collection firm for your unpaid invoices, we’re here to help.
Today’s post is a detailed guide on how to pick the best debt collection company for your business.
What Does a Debt Collection Agency Do?
A debt collection firm helps recover overdue payments on behalf of other companies. They do so by employing several tactics, including phone calls, personal visits, or emails, to name a few. Collection agencies are persistent and will spur your clients into paying what they owe you.
These collection agencies specialize in what they collect. For instance, some agencies specialize in medical debt collection or utility debt collection, while others only deal with credit card debt. Regardless of the type of debt, there’s a high chance the debt collecting agency will get back your unpaid debt
How to Pick the Best Debt Collection Agency
There’s no shortage of debt collection firms in the country. Here are a few tips to ensure you hire the best among the lot.
1. Make Sure You’re Certain About Your Decision
Hiring a collection agency to recover your unpaid invoices may paint you in the wrong light. However, steady cash flow is essential for your company to remain afloat. Before calling the collection agency, it’s important to weigh out all the potential risks and make a final decision.
In most cases, hiring a collection agency always works for the best. No business is without its fair share of delinquent clients that flat out refuse to pay. If a client still won’t pay after several reminders, it’s obvious that the client isn’t planning on paying you any time soon.
The same goes for clients who constantly complain and deny they owe you anything. If that’s the best, you better leave the debt collection to a reputable debt collection company. That way, you can focus on running your business while the firm recovers your cash.
2. Ask to See Their Operating License
If you decide to hire a collection agency, the first thing to check for is whether they have a valid license. In most states, all debt collection companies require a license to operate. However, in other states, they only need to pay a fee and submit their financial statements.
Check whether your state requires debt collection agencies to have a license. If it does, ensure you only pick a company with proper licensing. Keep in mind that an expired license is not a valid license.
That said, licensing requirements vary with your company’s operation scale. If your company operates locally, you only need a debt collection agency with a local license. However, if you operate on a national scale, you have to find a collection agency with a license that cuts across multiple states.
3. Check Their Affordability
Before settling for a debt collection agency, it’s a good idea to know how much the services will set you back. Collection agencies charge a percentage of the amount they collect, usually between 25% to 50%. The amount these agencies charge also depends on the type of debt they’re collecting.
That said, it’s important to hire a collection agency you can afford. It’s not uncommon for debt collection companies to charge ridiculous rates for their services. That’s why you need to do your digging and find a collection agency with reasonable rates.
That said, it’s also not a good idea to settle for the cheapest collection agency you find, especially if they charge a flat rate. You may end up paying the agency but recover any of your unpaid debt. Look for a company with a reasonable rate and stick with it.
4. Look at the Company’s Success Rate
The debt collection agencies in the US are worth a staggering $19 billion, with thousands of debt collection agencies across the country. The success rate is what separates top-tier agencies from substandard ones.
A collection agency worth its name will be proud to show their success rate to prove their proficiency. Also, ask them if they can give you any referrals that you can contact. These referrals will tell you about their experience with the agency and what to expect.
Apart from these referrals, also check out sites like the BBB or Yelp for honest and unbiased reviews. They should give you a firm idea of the type of collection agency you’re working with.
5. Find an Agency That Aligns With Your Company’s Goals
Your relationship with the collection agency should extend to more than just getting back your unpaid debts. The debt collection agency should be more like a partner that helps your company achieve its objectives.
To help you out, create a list of traits or values you want the collection agency to have. Look at how the agency reps speak to you and your staff. Check on their responsiveness and their general customer service.
You Deserve Nothing But the Best
The information above should help you find the best debt collection agency to recover your unpaid invoice and debt. Rember, you deserve only the best agency to handle your debt collection. Settle for nothing less.
Contact us today, and we’ll help you recover any unpaid debts in a flash. We’re at your beck-and-call.