How to Choose a Collection Agency
Choosing a collection agency for your business comes down to finding the agency that fits all or most of the needs or wants you have for your business. Because each collection agency works in its own way, sets its own fees and names its own terms and conditions (as long as they are within the law), start by gathering all of this information. Then narrow down your options by matching collection agencies with your business' collection needs.
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Instructions
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Set your spending budget. Different collection agencies charge in different ways. Some charge a percentage of the accounts they are able to collect. Others charge you a flat-rate fee per file that the agency is able to collect on.
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Identify collection agencies that work within your budget. As you gather information on the fees that agencies charge, prioritize the list so that the agencies that fall within your budget are at the top of the list and those out of your budget are toward the bottom of the list.
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Verify the geographic region or states where the agency is licensed. A collection agency has to be registered and licensed in each state it works to collect debt. This means that you have to verify that the agencies you are considering have a license to collect in the states where you have debtors. Go back to your prioritized list and mark off any agencies that cannot operate in the state or states you need.
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Verify that the agency has a liability insurance policy. If a debtor sues you or the agency for unlawful debt collection practices, harassment or some other issue related to collecting the debt, you want to make sure that the agency has liability coverage to cover the legal fees and costs associated with a lawsuit.
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Talk with the debt collection representative or representatives who will be handling your files. Establishing rapport with the individuals who will be working with you and your staff is important. When you like the person who is representing your company, you're more apt to have a positive working experience. Go back to your list after your conversations and reorder the list based on rapport and personal comfort level. If all other factors are the same, this may be the deciding factor.
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Obtain and review the agreement from the collection agency. Contact the top three collection agencies on your list and get a copy of the collection agreement you would sign if hiring the company. Read it carefully and mark any areas where you have questions or concerns. You can also have an attorney review it. Get answers to your questions or have the agency rewrite areas of the agreement to fit your business needs and comfort level.
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References
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