Accounts Retrievable Systems – Choosing A Collection Agency
There is no question that using a debt collection agency is a sensible move for small and medium sized companies.
The debt collection industry, probably more than any other, has suffered with a bad reputation. Whilst there are undoubtedly some bad eggs out there, there are many more very professional, conscientious outfits.
The question you need to ask before you start choosing an agency is why exactly are you choosing one? What debt do you want collected?
Many companies start thinking about using an agency when a debt is written off. This is undoubtedly too late.
Written off debt is only attractive to the type of debt collection agency who will ask for money up front.
My own personal view is that paying for debt collection services in advance is a very bad idea. At our agency in London, we often get calls from companies wanting us to chase other agencies that have been paid up front fees.
A debt collection agency is best used at a specific age on your ledger. The age this happens should be based on a number of factors. Your credit terms, your in-house resource, your client base etc.
If you have in-house credit control make sure they concentrate on the more collectable debt. This will usually be between 30 – 65 days. If a debt on 30-day credit terms has not paid after 60 days and a problem hasn’t been highlighted, experience will tell you that this will take some extra pushing to pay. In-house credit departments can spend half their time working on these types of problem debtors, resulting in less time with the more collectable debt.
Result: Debtor days go up, cash-flow goes down.
Using a professional agency at this point will avoid these pitfalls.
The key areas to check on an agency would be:
– Current Clients. Ask for names and contact details. Then check them out. For me, this should be the number one thing to do on your check list.
– Make sure the fees are based on a No Collect / No Charge basis (between 5% – 15% and the debtor still pays you. You are then invoiced separately on monthly basis.
– Try and ensure you have collectors who are allocated to your account. This will ensure they start to understand your business and your clients.
– Set up review dates at quarterly periods.
– As strange as it may sound, don’t let membership of any association sway you one way or the other. Membership tends to be based on paying fees alone.
– Choose an agency who is willing to collect debts in your name
Choosing the right agency can be the difference between survival and failure and can give a huge boost to your company’s cash-flow.
A debt collection agency, often just called ‘collection agency’, is a company that will pursue individuals and businesses who still owe money on debts. Thus they will tend to work for creditors or for lenders and will then try to return these groups’ cash in return for a fee or often a percentage of that money. Many companies can use debt collectors, but largely they will be used by those who lend a lot of money – banks, mortgage companies, debt consolidation services, car financing companies and the like.
There are a vast range of debt collection agencies, and they perform a great variety of roles in collecting debt. Third party debt collection agencies for instance are those that are contracted to collect on debt and this is normally a fee – as opposed to some very large businesses that might have internal debt collectors or that might try to handle the situation themselves. Using a third party debt collection agency however means that you will be using experts in the field who will have full knowledge of your legal rights as a lender and also a lot more experience in getting back your money in the most efficient way possible. Each country has specific laws regarding collection agencies, and so Australian collection agencies will work differently to those in other territories.
There are many methods however that are used largely universally by debt collectors. ‘Collection calls’ for instance are calls where the collectors visit the homes of those in debt in order to inform them of their debt and their obligations. Normally statistics will then be collected so that the collectors can learn when the individual is most likely to be home – this is the kind of in-depth collection achievable by using a good third part debt collection agency.
Debt collectors have to abide by many rules and may not be rude or threaten violence. At the same time they may not deceive the person in debt by saying they could be arrested etc. As well as this being illegal, it is also a far better business practice as it would not put other individuals and companies off of using the creditors in future – and it is important for a company to give off a friendly and professional reputation. In these circumstances a debt collector will be acting as an ‘ambassador’ of sorts for your business so it is very important to use a good one. At the same time though they must be skillful in establishing a rapport with your clients and in convincing them to pay the money this way without the borrower cutting off contact. They will also be required to help agree on the price that is owed – particularly in disputes between debtors and creditors – and to arrange a repayment plan that suits all parties.
When a creditor lends money to a third party, they are essentially taking out an investment on that person – trusting them to pay back their debt with interest so that the company’s money grows. There is a large element of trust then, and when this unfortunately does not work out, a good debt collection agency is the best way to make back that investment.
Accounts Retrievable Systems – Choosing A Debt Collection Agency
Deciding on your debt collection agency is a task which is crucial for your business. You cannot afford to get it wrong. Keeping a few points in mind while choosing your agency would help.
Debt Collection Agencies offer third-party assistance when your best efforts to collect debt are thwarted. They are a pre-legal course you could take for debt collection. Services of a reputable debt collection agency are designed to protect your reputation, retain your customer base and maximize your cash flow. However, you should examine all debt collection agencys on the table against some basic criteria. Decide on a debt collection agency that ticks all of your boxes.
How to Choose Your Collection Agency
Following a well thought out procedure while selecting a Debt Recovery Agency will always help.
Search
Searching the database of the Credit Services Association (CSA) is the best place to look for a Debt Collection Agency (debt collection agency). The CSA is the umbrella body for the collection industry, which bounds its members with its Code of Practice. This ensures legal and ethical practices, high business standards, and fairness in dealing with your customers.
However, before you visit CSA website, you should determine whether you need B2B or B2C competent debt collectors. Every agency has its core competency in B2B or B2C debt collections. Both the streams require different skills sets and working practices are also different. So look at this aspect before taking the final call.
Shortlist
When you have readied a shortlist of debt collection agencys, begin testing their openness, integrity and customer service skills. For determining their level of competency, ask them following questions:
* Do you have customers in my particular business stream?
* Can you offer me references that I can contact?
* Do you operate on a no-collection-no-commission basis?
* What are your remittance rules?
* Do you provide online performance reporting?
If the Debt Collection Agency provides satisfactory answers to your questions, you can move ahead.
Satisfy
Now is the time to take a final call on appointing the debt collection agency. Make an appointment with the debt collection agencys you have finalized and put up all the queries you have. You could ask them whether they have in-house tracing system to locate absconded debtors, their skills regarding overseas collection, and in-house legal assistance.
Basic Debt Collection Skills
A debt collector must have some certain basic skills to succeed in his job:
Negotiation: He has to be a good negotiator. He will be required to convince debtors about repaying their debts and secure their acceptance of cash settlement plan.
Firm but Fair: A debt collector has to be firm but should make unreasonable demands.
Investigation: To investigate is a part of debt collector’s job. He might be required to trace an absconding debtor or find out details of a persons’ finance.
Fair Debt Collection Practices: Collectors should be well-versed with the fair debt collection practices. An aberration could land them and the agency in legal trouble.
Accounts Retrievable Systems - Collection Agencies Provide Professional Help
Bad debts are a growing area of concern for businesses the world over, which is the reason why most of them take the help of collection agencies. Collection agencies not only work more efficiently but more professionally to get back your debts, while you can focus on your business. Read on to know more.
Business operations are getting complicated with each passing day and hence, there is need for greater professionalism and specialization in dealing efficiently with every aspect of a business. In such a scenario, recurring problems like bad debts can pose a big problem for a business. It is a problem that all businesses have to deal with. However, if the magnitude of the accumulated bad debts increases, it can mean huge losses to the business. Trying to deal with it requires not just time and effort but also specialization and experience. Neither do the businesses have that much time nor the specialization to deal with bad debts. Moreover, it is not uncommon to have certain debtors who are not reachable. It doesn’t make any sense to try to locate these debtors which will only result in wasting your time, hence, the need for appointing a professional collections agency who can take on the responsibility for the hassling task from you, assuring the best possible results, so that you can shift your attention from the delayed payments and focus on the core job, that is your business.
What makes the collection agencies so efficient in collecting your debts? Since collection of debts is the main job of the collection agency they will spend far greater time than you can on the delayed accounts. They have got the specialization and the experience which makes all the difference between their approaches in dealing with the problem. They work step by step in a particular fashion, making their best efforts to get the payments as smoothly as possible while being highly professional in their approach in the entire process. This kind of professionalism is extremely important in debt collection, because while you want for your payments, you often do not want to spoil your business relations with the debtors which are necessary in the domain of business. It is yet another important aspect of taking professional help rather than trying to get back your debts on your own.
A collection agency typically, first tries to contact the debtor through a series of notification letters called demand letters giving ample time to the debtor to respond and also offering the option to enter into negotiations. If the debtor fails to respond to the letters in the given time period, the debtor is then personally contacted. Direct contact with the debtor often results in a positive reaction as firstly it is not a very good experience to be contacted by a debt collection agency and the debtor understands that the matter is now serious. Secondly, the debtor can at times be given some options to make the payment by negotiations. If there is still no response, then legal action can be taken against the debtor as a final resort, with your consent. Legal action is only undertaken when all other efforts fail and is not used under general circumstances.
Accounts Retrievable - A Debt Collection Agency Can Help You
Many companies are concerned about money owed to them by individuals or other organizations so it is very important for them to employ the professional help from collection agencies.
Debt collection agencies are the ones who are well equipped and more knowledgeable when it comes to figuring out which methods to use to effectively collect debt from the debtors.
Businesses and companies should just concentrate on their operations and other ways to boost their revenue and leave the collections to the debt collection agencies instead to allow for 100% success rate on collections. It is important for a business to realize that bad debts can affect the accounting books in a great way and can decrease the likelihood that a business will succeed, especially if the debts are so enormous that it does not balance out to the gains of the company. A debt collection firm can step in and help sort everything out and make sure that all the backlogs and losses are mitigated.
Debt Collection Agencies
Debt collection agencies have the right amount of manpower that has been trained especially for debt recovery. This is a type of skill that is so highly specialized because of the complexity of gathering money that was owed. Debt collection agencies have invested their money and time in the art of persuasion and conversation to give opportunities for the debtors to negotiate and eventually settle their debts. Debt collectors have studied consumer behavior, most specifically those of the debtors and they have mastered all the moves that debtors do to evade paying. It is the debt collection agency’s job to go around these obstacles to make sure that debts are paid.
One of the best things that a debt collection agency can do is send a debt collection agency representative. By doing so, they are able to establish a more serious tone of debt collection more than how letters or phone calls can. A lot of debtors feel that when they encounter a debt collector face to face, the debt collection is much more serious and more urgent than ever before. A collection agency understands perfectly that phone calls and letters, and other impersonal methods of collection can be ignored by other people and not be taken seriously.
Debt Collection Agencies
Debt collection agencies also have the right connections with private investigators and other authorities who may be of big help in trying to recover debt. Private investigators may be employed in order to look into the personal information of the debtors that may help in legal action or further negotiations that may push for them to pay their debts. Asset investigation representatives are also ready to take on the job of researching about the properties, bank accounts and other pertinent information that will show the capability of a debtor to pay the overdue amount. These are the methods that debt collection agencies are capable of in order to help out companies and businesses recover money that is rightfully theirs to start with. By doing these, debts can be settled effectively.
Accounts Retrievable Systems - Collection Agency Services
Businesses know the significance of keeping on the top of their accounts receivable. Of course, they also know that it can be quite time consuming and often is not an easy task. For this reason hiring the best collection agency services can not only save you time and effort, but can also recover you the money that would otherwise not be possible. After all, you need to focus more on your core business rather than going after your debtors. By using the services of a debt collection agency, you can add more revenues to the company from the accounts that may otherwise have to be written off.
Collection Agency Services
When the file is given to the collection agency services for debt recovery, they usually require that you cease all communication with the debtor. This measure is taken to avoid any perception from the debtor that they can easily go back and forth between your business and debt collection service in order to avoid paying their debt.
If you are interested in hiring one of these collection agency services, then you should check each one of them thoroughly. Whether they specialize in bad check collection, retail or commercial collections? Do they have experience in collecting debt in your particular business?. These things do make a difference, so it is better if you can clarify beforehand. You should also ensure that the collectors working in the company are trained in dealing with the customers. They will represent you and often tempers run high in collections; just one bad conversation can have serious repercussions for your business reputation.
You should also seek references, as good collection agency services will happily provide you with. As collections services employ different strategies to collect outstanding debt, you must make sure that you are aware and approve of all such methods. Each state in the USA has its own collection laws, so be sure that collection agency you hire is up to date on all current collection laws and regulations.
Collection Agency Services
Sometimes, when your accounts are behind on payments, you are going to have few accounts that may have “skipped”. This means they may have moved to some other place without leaving any forwarding information. Such skips can cost considerable money and time to businesses, so most collection agency services offer some kind of skip tracing service. Cost involved in such services may vary and normally depends upon the time and resources spent in tracing the debtor.
One of the biggest tools that debt collection agencies use is the series of demand letters that they send out to the debtors. You can request the copy of those letters as this will help you in comparing different collection agencies on how they measure up. As telephone is their second most important way to communicate with your debtors, most of the collection agency services use different scripts while speaking with the debtors. By asking for such scripts from every collection agency, you can easily compare them against each other so that you can make an informed decision. Most of the debt collection agencies have their own websites where they list the services provided by them and various other details you might be interested in. So a little bit of research by going online will also help you in hiring the best collection agency.
Accounts Retrievable Systems - Benefits Of A Collection Agency
If you are a business owner and have several debts in your accounts payable that have gone beyond a normal time frame when you expect to collect, you need to look into the possibility of hiring a debt collection services agency. There are different time frames for different businesses, but whether it is 60 days, 90 days, or even more time, the moment you go from reminding people of a late payment, to trying to collect on a debt, is the moment you need to hire professional collection services.
Too often a business owner will try to collect the money by himself, while others will delegate the responsibility to one or more people working in accounts payable; but these people seldom have the specialized knowledge and skills needed to collect on the money. Those that work in the field of collection services know various ways to get the money that is owed to you. They are not always successful, but to be sure, they will show a better result than a business owner that has had in the past.
Collection Services
Larger corporations have their own internal collection divisions, but many of them will contract the work out to professionals. The reason for this is that it cost nothing unless money is collected. If money is collected, the agency will take a commission for their effort. What this means is that if the agency is not successful, the business pays nothing. There really is no downside to hiring a collection services agency. This is true for a small or medium size business as well as a large corporation.
The commissions charged by a debt collection agency will be dependent on several factors. One will be the particular agency you are doing business with. The more successful they are, the more they will charge, and this is to be expected. However, there are variations in commissions. They are dependent upon how many accounts you bring to the agency as well as how large the dollar value of the accounts are. The more debt you bring to an agency the less the commission will be, and the higher the dollar amount per account, the lower the commission. Some agencies have a specialty with large dollar accounts and may be able to collect a greater amount of the outstanding debt.
Debt Collection Services
For many business owners, the thought of using collection services has never occurred to them. When you consider that the cost is basically zero, unless the money is collected, it pays to hire an agency to work on your behalf to get even a partial of the amount owed. This is the barrier to overcome for many business owners: the realization that the money is not going to be collected without professional help. Whatever money can be collected at this point is like a bonus. It is found money. When a business owner can accept this, the assistance needed is only a phone call away. You can also contact a collection agency over the Internet. Either way you can get a quotation for the amount of debt you have that needs to be collected.
Accounts Retrievable Systems - Employing A Debt Collection Agency
Debt collections is a task nobody enjoys doing. Business owners naturally prefer that their customers pay on time and that friendly relations are maintained all around. But truth is, there are customers who are hard to collect from. There are cases when the debtor can not be reached by mail, phone and email. There are even those who simply vanish, leaving you in despair over the loss of funds that would have made a big difference in your business operations. But bleak though the situation is, everything is not yet lost. You can still employ a collection agency.
Employing debt collection agencies should only be resorted to after you have tried all other conceivable means of debt collection. A debt collection agency is an entity that provides debt collection services. By employing a debt collection agency, you are in effect, outsourcing your debt collection functions.
By employing a debt collections agency, you do not generate more opportunity costs. Instead of spending frustrating hours on the telephone, writing mails and emails to reach your phantom debtor, you can do other more productive things with your time.
And debt collection agencies are effective in inducing people to pay their debts. Most people are wary of collection agencies. The moment their debts are with collection agencies, bad things happen to their credit records. Collection agencies are also persistent in their efforts to collect the money, thus a constant stream of phone calls is expected. Employing a collection agency proclaims to your customers that you are determined to collect.
Debt collection agencies can also help you with filing a case in court if such becomes necessary. Collection agencies are proficient in debt litigation and will be valuable if you decide to go this route. Of course, you have to make sure that the debt owed is worth the cost of going to court.
Finally, the best thing about collection agencies is the fact that you don’t pay them anything while they are trying to collect off your customer. They work on commission basis, payable only after they have managed to collect from the debtor. Thus, if the collection agency is not able to collect, you saved time and money that you would have spent had you been doing the collecting yourself. If the debt collection agency succeeds, then you get your money back minus the paid commission that’s money well spent.
Accounts Retrievable Systems - Hiring A Debt Collection Agency
Generally speaking, the ideal time to hire a collection agency is when you feel that your customer has no intention of paying you. The general rule of thumb when it comes to collecting on an unpaid bill is that sooner is much better than later. Statistically speaking, after 3 months you can expect to collect $0.73 on every dollar. However, after 6 months the amount you’re likely to collect drops to only 50% and then to only 25% after 1 year.
If you’re serious about getting your payment, you’ll want to hire a collection agency once the account is 90 days overdue. Of course, you can use discretion to decide which accounts will be sent to a collection agency and which will not. If a long-time customer is experiencing some financial trouble and has been in contact with you, you may wait longer than for a new customer who has been avoiding your bills and phone calls.
Warning signs that customers are not planning on paying:
Aside from missing payments, there are a few specific signals that customer send to cue you in to the fact that they probably don’t intend to pay.
– Relocating without submitting a change of address with you or the postal service
– Customer doesn’t respond to your phone calls, bills or final notice letters
– Customer denies that he or she owes you money
– Customer disputes the quality of the product or service and refuses to pay
If your debtors show any of these signs, there is no need to wait past 30 days to hire a collection agency.
When not to hire a collection agency:
If the debtor is a company that has gone out of business, find out what type of company it was before hiring a collection agency. If the company was a corporation or an LLC, your chances of collecting the debt are low unless you have a personal guarantee. However, if the company was a sole proprietorship, a collection agency can collect the debt from the owners who are personally liable for any debt.
What to do if your debtors won’t pay:
The reason it’s so critical to move quickly when it comes to debt collection is that it is very difficult to recoup a loss from a non-paying customer. You can write off the cost of any goods sold that weren’t paid for as a bad debt tax deductible item. However, you cannot write off the profit you should have earned from the sale of the goods and you cannot write off money owed for services rendered.
Since the amount of time that elapses has a direct impact on the amount you’ll recover, your choice of when to hire a collection agency depends on the amount of profit your business needs to thrive. Whether $500 or $50,000, having a solid plan of action to take once an account becomes delinquent will save your company’s hard earned money.
The type of child support enforcement used depends on how long the parent has not paid, the amount due, and the jurisdiction. Some common enforcement methods are wage garnishment, removal of licenses, and fines. In some cases, a person who is not in compliance with child support laws may be jailed, have his or her tax refunds held, or have liens placed on a car or house. Child support enforcement typically becomes stricter the more the parent owes or if the parent attempts to cross into another country while owing child support; for example, passport denial and federal prosecution are legal methods of enforcement used in some countries. Another method of child support enforcement, which is typically done by individuals rather than state officials, is public announcement and embarrassment on the Internet or television news shows.
One typical child support enforcement method involves taking money directly from a parent’s income source so that the parent has no way to withhold payment. The usual method of doing this involves the legal jurisdiction interacting with the parent’s employer so that the employer sends a portion of the parent’s income to the jurisdiction. In the United States, for example, up to around 60 percent of total wages earned can be garnished for the purposes of child support.
Another way that some jurisdictions may enforce child support payments involves the garnishment of tax return funds. In some countries, if someone is behind on his child support payments, tax return funds can be seized to fulfill this obligation. Implementing the seizure of tax return funds usually involves working with the local child support enforcement agency.
Depending on the jurisdiction, the parent can be held in contempt of court for not paying child support. Besides court costs, he or she will likely be ordered to pay the balance in addition to being fined. The fine can be quite hefty, especially if the parent has repeatedly failed to make payments or obviously attempted to evade payment by moving into another region or country.
If the parent fails to pay child support for a certain period of time, such as one year, or the payment owed reaches a certain amount, she may find herself without a driver’s license. This law can usually affect other licenses, from hunting or fishing to medical licenses. The license is usually returned when the parent proves he is up to date on child support payments.
