Most businesses, at some point, will need to hire a third party debt collection agency. Some clients won't pay the bill despite continued and even exasperating efforts. A write-off is sometimes the best option; you should hire a collection agency in such circumstances. At the same time, there will be concerns, especially if your business has never partnered with a collection agency.
In this blog, we'll focus on the top queries you must ask a third party collection agency as part of the research process before you hand over the customer account.
Getting into the industry
Debt collection agencies specialize in specific industries or niches. Therefore, it's always best to ask the agency what type of business or industry they primarily serve and the debtors they deal with. If a collection agency works as per the industry standard or functions similarly to yours, there's a high chance of ensuring complete revenue flow. However, it's best to be
wary if the agency suggests that all business debt is the same.
Licensed collection agency
In the U.S., a third party debt collection agency must be incorporated and licensed within the state where the debtor is located. However, each state has legislation to provide some assurance that the account gets handled professionally and ethically.
If an unlicensed or improperly licensed agency works on behalf of a company, it exposes the potential liability. There's a chance that the agency will tell you about it. Verifying all the areas before you partner with such a firm is the best option for your business.
Insured or not?
There's always the possibility that the debtor may feel they are being treated unfairly; as a result, they may sue a third party debt collection agency. Therefore, ensuring that the company you partner with carries professional liability insurance is best. In addition, having insurance will provide coverage should the agency get sued while working on the accounts.
It's always wise to carry professional liability insurance. The business shall be liable if the judge finds you failed to deliver as promised.
Collection Tactics
In order to maintain the brand reputation, you must preserve, as much as possible, positive customer relations. Maintaining a positive relationship means you have an ethical debt collection agency. The agency should be the one that tries to find a solution for the client and is discreet and professional.
You may talk to the agency about the methods the collection agency will use when collecting debts, and together, agree on a collection strategy you can support. It's best to ask for some references or request a small tour.
Submitting accounts
Starting a new collection agency isn't rocket science, but it requires some basic information. You may ask any agency how long the process usually takes, what information it'll take to get started, and how subsequent accounts will be submitted.
While it's paper-intensive, creditors can access a secure online system to load debtor information directly. As a result, there's zero hassle or missed information. You will do it any time.
Locating disappeared debtors
Some debtors will go to great lengths, including avoiding paying bills. A professional collection agency employs skilled skip tracers and techniques to track down disappeared debtors. This means the agency legally accesses various databases and other information sources to locate a debtor who has left no forwarding address. Running an efficient skip-train process significantly enhances the chances of collecting from an absentee debtor.
Cost
When you finally find the right third party debt collection agency, you want to know exactly what its services will cost. Besides, it's best not to be surprised to discover that each agency has a different fee structure.
You must also keep in mind that some collection agencies will charge a percentage based on the amount they collect, while others charge a fixed rate based on the size of the debt.
Final Wrap
Fee structures are similar, but the variance comes in the success rate. A professional collection agency works quickly and effectively. At Vital Solutions, the ultimate goal is to collect your money within the shortest period. Besides, the agency won't charge if it fails.
