Accounts Retrievable Systems - Should I Hire An Agency?
The answer is yes and here’s why!
When lenders or creditors do not have the time to pursue debtors, they usually hire debt collection agencies to do the job for them. On their behalf, debt collector agencies will be charged with collecting payments from individuals, entities or businesses.
Debt collection encompasses a wide range of negotiating skills, legal processes and a smooth procedure for chasing down past-due accounts. A lot of agencies act as agents of the lenders and do the task of collecting debts for a fee or a certain percent of the full amount owed.
Usually, if the agency succeeds in the debt collection, the creditor will set aside a percentage of the collected amount. This will then serve as the payment for their services. Commercial debt collector services have skilled professionals to look over other people’s debt. These professionals are trained in the art of debt collection depending on the type of debtor. The collection agency usually comes up with a strategy for debt collecting.
If you opt to use a debt collection service, you need to first consider the advantages of hiring Debt Collection Agencies
• Debt solicitors that focus on collecting debts usually have the expertise, time and resources needed to be able to carry out the job.
• Most of the time, hiring a trustworthy debt collection company is a speedy process of recovering debts.
• If the borrower still refuses to settle their debt, the agency can send solicitors on your behalf.
• If the firm that you hire is professional and polite enough, you can keep your customer, if you want to.
• They are focused on your business plans without the worry of bad debt accumulation.
• They have good customer relationships as collection agencies are professional and respectful.
• They save the expense of in-house salaried personnel.
• They recover more debt as collection agencies have the incentive of getting a percentage of what they collect.
• They make sure that they safeguard your business against legal troubles as the collection agencies are familiar with debt collection rules and regulations
Accounts Retrievable Systems - How Collection Agencies Help
The term collection agency is usually applied to third-party collection agencies, called such because they were not a party to the original contract. The creditor assigns accounts directly to such an agency on a contingency-fee basis, which usually initially costs nothing to the creditor or merchant, except for the cost of communications. This however is dependent on the individual service level agreement (SLA) that exists between the creditor and the collection agency. The agency takes a percentage of debts successfully collected; sometimes known in the industry as the “Pot Fee” or potential fee upon successful collection. This does not necessarily have to be upon collection of the full balance; very often this fee must be paid by the creditor if they cancel collection efforts before the debt is collected. The collection agency makes money only if money is collected from the debtor (often known as a “No Collection – No Fee” basis). Depending on the type of debt, the age of the account and how many attempts have already been made to collect on it, the fee could range from 10% to 50% (though more typically the fee is 25% to 40%).
Some debt purchasers who purchase sizable portfolios will utilize a Master Servicer to assist in managing their portfolios (often ranging in thousands of files) across multiple collection agencies. Given the time-sensitive nature of these assets, many in the Accounts Receivable Management (ARM) industry believe there is a competitive advantage in utilizing this technique as it gives the debt purchaser more control and flexibility to maximize collections. Master Servicing fees may range from 4% to 6% of gross collections in addition to collection agency fees.
Some collection agencies offer a flat fee “pre-collection” or “soft collection” service. The service sends a series of increasingly urgent letters, usually ten days apart, instructing debtors to pay the amount owed directly to the creditor or risk a collection action and negative credit report. Depending on the terms of the SLA, these accounts may revert to “hard collection” status at the agency’s regular rates if the debtor does not respond.
In many countries there is legislation to limit harassment and practices deemed unfair, for example limiting the hours during which the agency may telephone the debtor, prohibiting communication of the debt to a third party, prohibiting false, deceptive or misleading representations, and prohibiting threats, as distinct from notice of planned and not illegal steps. . In the United States, consumer third-party agencies are subject to the federal Fair Debt Collection Practices Act of 1977 (FDCPA), is administered by the Federal Trade Commission or FTC.
In the United Kingdom third-party collection agencies that pursue debts regulated by the Consumer Credit Act must hold a Consumer Credit Licence and work within the framework of the 2003 fair debt collection guidance; licences are issued and regulated by the Office of Fair Trading.
Accounts Retrievable Systems - About Our Collection Agency
Since 1986, ARS has delivered professional, highly effective results for clients on a worldwide basis. ARS is recognized as a leader in Judgment Collections, Commercial Collections, Consumer Recovery, and is a specialist in collection of Child Support and Spousal Maintenance. Our partnership approach, rapid collection and ability to preserve relationships form the cornerstone of our commitment to excellence.
With three decades of experience both domestically and internationally, ARS serves a broad spectrum of industries.
ARS collection agency clients benefit from an array of collection solutions designed to increase cash flow, reduce expenses, improve operational efficiency and maintain positive customer relations. We are proud of our ability to deliver professional, effective and timely results worldwide.
ARS strives to remain a leader in the industry. ARS is comprised of a strong, cohesive and committed team. Our consistent track record for successful outcomes stems from a forward-thinking corporate mix where personal and professional aspirations thrive and progressive ideas flourish. Our team is kept current on all laws and statutes, FDCPA and FCRA compliance through ongoing education, and by attending seminars and meetings throughout our affiliations with the Commercial Law League of America (CLLA), the American Collectors Association (ACA), and DBA International (DBA).
Our collection agency’s commitment is to constantly reinvest in our employees, new technology, recovery resources, professional staff, legal solutions, and innovative systems and procedures.
ARS’s legal solution is centered around our network of experienced collection attorneys. Our Forwarding Department coordinates litigation services for all 50 states and beyond. By having successfully litigated tens of thousands of cases for creditors, our legal network has the litigation experience to help our clients achieve maximum results and minimize any potential exposures.
ARS collection agency utilizes a wide range of technological tools and resources to help each client achieve the best possible results. Our staff has access to the latest software programs with enhanced security and a state-of-the-art secured network with a full disaster recovery program.
Our focus is on the specific needs of each client’s portfolio, whether it is for one claim or for thousands and is built on systems and personnel already developed, tested, and proven on a day to day basis. ARS collection agency will never close an account until every collection option has been exhausted.
Our services are based on a contingency fee arrangement; therefore if our attempts to collect are not successful, you will not be charged!
Accounts Retrievable Systems - Commercial Debt Collection
The economic downturn and the continuing recession are spurring bad debt. Debtors refuse to pay and businesses are left holding inactive past customers. This has blocked the funds flow that businesses are so dependent on. Many companies have tried collecting bad debts but with marginal and rare success. That’s because they neither possess business debt collections experience, nor can they tap into excellent investigative sources. This is why businesses must rely on commercial collections agencies.
Hopefully, the client pays up at the expected time, the business remains in the black and the business can keep running. Unfortunately, a credit agreement may be broken forcing one to take steps to get a debt paid up. And this is exactly what a commercial collections agency is designed to deal with.
Collection agencies assist business to collect bad debts, which helps restore some positive cash flow for the company. A number of reasons point to the usefulness of using collection agencies to collect business debt:
Business Debt collection is a serious business that requires a large network and special negotiation skills and most businesses do not have it in them to chase debtors. They would rather focus on their business and on generating revenues rather than waste time and run the risk of being unnecessarily sued. So, business debt collection requires experience and skills and so it is best that it is left to a commercial collection agency. Moreover, the success rate and low fees charged by these agencies ensure a win-win scenario for the business owner.
When you have located several possible agencies to work with, you will next want to contact them to request more information. Have a copy of the credit agreements that your clients have signed ready to provide to the prospective agency as well as copies of typical outstanding invoices to be paid and any other data to demonstrate the client’s typical behavior.
While speaking with various agencies, you will be provided with additional services that they offer. Many commercial collection agencies have their own legal departments in addition to collection departments, and this can greatly reduce the amount of time and money that your company will have to pay if you choose to pursue outstanding debts through the courts. Price negotiations will also be discussed at this time. If you’re provided with lower quotes from competitive agencies, mention it.
Debt consolidation services, for those who are looking for a way to maintain a comparatively decent credit score or for those trying to avoid bankruptcy, is ideal as a debt solution. You can be the only judge if debt relief will work in your position. Before you decide, think carefully of the pros and cons of debt consolidation services.
There are various kinds of relief companies willing to offer their services, however you must be wary over those who are just after your hard-earned money. To make sure that the company is indeed willing to help you solve your dilemma, the company must have full accreditation’s from national debt relief groups to solidify their legitimacy and reputation.
Taking steps to partner with a commercial debt recovery agency can potentially lead to exponential savings, a higher profit margin, and a lack of backlash that could lead to failure of a business.
Accounts Retrievable Systems - Commercial Collection Agencies
Commercial debt collection agencies are organizations that specially deal with the attainment of payment on delinquent business accounts. The agencies work through direct and prompt negotiations with debtors for the purpose of ensuring that they collect, and may employ passive contact approaches like letters and other types of written notifications as a starting point. There are instances when debtors are unwilling to negotiate ideal plans for making full payments and when this happens, the debt collection agencies are known to resort to more aggressive measures. However, at all times, they operate within the confines of the law. Some of the actions taken by the agencies include pursuing of legal representation or reporting defaulting debtors to major credit bureaus.
If they take legal action and succeed, they do not hesitate executing the judgment and in some cases, this might include the seizure of debtors’ property. In extreme circumstances they might even move on to liquidation of debtors assets. Agencies that deal with solving debts between businesses are also known to be well equipped with the ability of handling any issues or concerns that might arise in the process of service delivery. The services offered are varied and might include obtainment of payment on bad checks, skip tracing, second placements or any other issue that might be specific to individual clients and circumstances. In essence, the services offered by commercial debt collection agencies are designed to be used by any business that wishes to recover payments on delinquent accounts.
A large number of commercial debt collection agencies are also known to offer industry specific features with their services. Top on the list is credit application assistance. This is a valuable service and it is offered by a majority of the agencies. With this program, the agencies are able to sniff out any untrustworthy or fraudulent applicants before they accumulate debts. In order to accomplish this end, there is a lot of screening that must go on and this is done on the credit report of the applicant. Some of the things they look out for include false phone numbers, addresses and any other details that might be viewed as an indication of increased risk.
Commercial debt collection agencies are also known to research detailed business profiles and this often includes prior credit history of a company. In addition to this they can also link the personal credit history of business owners with that of the company for the purpose of ensuring that any unforeseeable predicaments are eliminated at an early stage. There are other features (which are part of benefits offered by commercial debt collection agencies), and these include consumer profile credit reports and collection reports. The point is that these companies can help nip a problem in the bud before it blossoms into a major problem down the line.
Another important aspect that defines commercial debt collection agencies is their ability to track down delinquent clients. These agencies are operated by professionals who know how to operate specific technology in order to acquire the desired results. They do this through a technique known as skip tracing where they search traces of an individuals activity though data banks and some other additional locator programs. Collection agencies employ trained professionals who specialize in getting you money that you deserve. Leave it to the professionals to collect your money, saving you time and effort in having to call clients as ‘the bad guy’. These agencies use tact and diplomacy to make the process as easy as possible, allowing you to run your business without the need to track down past clients.
One can purchase a judgment recovery course for under $50 in order to implement all what it takes to get your judgment satisfied. It is a learn-as-you- go worthwhile skill that can even turn into a part-time business that you can work from the comfort of your home. Many people have been awarded judgment by the court and do not know how to collect them.
If you decide to enter into the business aspect of judgment processing, the plaintiff who won the appeal will assign their rights, title and accrued interest over to you. Judgments are public record and you’ll have no problem getting leads. With about 100 letters of solicitation one can expect about 30 or 35 judgments to work on. What is nice about this business is that there is no confrontation and no need to talk to anyone. It’s all investigative skills and paperwork.
The other cost effective avenue for judgment enforcement is to resort to a judgment recovery specialist. They will generally collect the money due to you and split the proceeds 50 50. For larger claims in the $20,000 and upward amounts, the fees can be as low as 35 percent
For a more hands off approach and paperwork non-involvement, hiring a professional is the pragmatic choice that many make. After all, half a loaf is better than no loaf. A survey of small claims processing businesses indicate that they win 50 to 60 percent of their cases.
The judgment recovery business also will go after and reclaim interest and expenses associated with collecting the debt. About a 10 percent interest is the average interest in the U.S. that accrues to unpaid judgments each day they are outstanding.
The recovery specialist will investigate and locate where the debtors assets are, his employer and any attachable property and file the legal documents to freeze those assets or arrange to garnish their wages in order to legally satisfy the debt. They can seize personal property or assets, file a lien against real property or an income execution as the situation demands.
When assets are seized, an enforcement officer will take charge and be armed with a Transcript of Judgment and an Information Subpoena that details and identifies the assets. The enforcement officer can then seize the assets and sell them at an execution sale thereby applying the proceeds of the sale to satisfy the judgment.
Beware of the statue of limitations for your state. If the applicable statute of limitations expires prior to you filing your judgment claim or to you having resolved your dispute, one is barred forever from pursuing that awarded claim.
When the debtor pays off the judgment, the creditor will prepare and sign a Satisfaction of Judgment for the benefit of the debtor. This way any lien of judgment can be removed by the clerk and the county record book kept accurate. Judgment recovery is a source every plaintiff with an outstanding judgment should get familiar with.
Accounts Retrievable Systems - Debt Collection Tips
Debt collection can be a problem when you are the one owed money. Whatever the circumstances, if the money was borrowed, the result of an accident or injury to yourself or your property, you have a right to collect. It could be contract disputes or even allegations of property damage.
First approach the person face to face and ask for the money owed. Remind them of the circumstances surrounding the debt and the timeframe the debt incurred. Wait for them to answer.
They will either pay on the spot or feel compelled to pay off the debt in a satisfactory manner or they will want to be a problem, a thorn in your life. If they verbally abuse you, walk away. One should not confront the person any further.
Next send a certified letter to that person or business. List the amount of money that is due to satisfy the debt and any facts surrounding the debt, especially the date or dates evolved. Request how and when you expect payment. Make the letter to the point and businesslike. The Post Office will inform you when the letter was delivered or in the case it is undeliverable, you’ll get informed.
If the letter was returned undeliverable, you’ll need to locate a viable address and resend the letter. Contact acquaintances, friends, relatives or whatever you can sleuth out to get a current address.
Depending on the amount of money, small claims court may be a viable solution. Generally, cases involving a small amount of money usually less than $10,000 are addressed in this setting. Before filing your suit, familiarize yourself with the court. With a small claims court there is no jury. If you are looking for a jury trial, you’ll have to go to a civil court.
The person being sued is the defendant; the person doing the suing is the plaintiff.
For higher amounts of money you’ll need to look into a higher court to get the matter resolved. But whatever your decision, make a concerted effort to gather any and all evidence in your favor. It could be checks, photographs of property damage, receipts and other forms of correspondence, contracts, etc. If there were witnesses, get notarized statements from these individuals in regard to what they observed.
When a suit is filed, the defendant has a certain time to respond for a counter claim. There is a statue of limitations and the plaintiff should file suit before that window of opportunity disappears. Also you have to select the location or venue in which you want to file your claim. In most cases it will be the court that is closest to your home, but it could be a court closes to the address of who you are suing.
Next you’ll need to fill out the plaintiff’s claim form and pay the filing fee to the court clerk. Filing fees are generally based on the amount of the claim with higher monetary claims costing more. Once the form is filed your hearing will be scheduled and the opposing party will be served with a copy of your claim.
Serving this copy is best done by a licensed registered process server. A certified letter is the least desirable because if it is not signed for, it will not count as having been served. When your proof of service is at hand, present it to the court clerk.
At the date of your hearing follow the instructions given by the bailiff and the judge. You’ll tell your side of the story first and then the opposing party will tell their side. The judge will consider the evidence and render a decision. If the served party does not show up at their appointed time, the decision will be found in your favor.
Once you have a court ordered judgment that is found to your favor, then the real drama begins. Every day thousands of judgments are rendered, however the court does not enforce the collections of these judgments. The court has no authority to collect an award and leaves that matter entirely up to the plaintiff. Many have the misguided notion that the court will collect money for them if the win their case, but that is simply not true.
Resorting to an attorney for collecting a can be cost prohibitive since attorneys often charge a large retainer and many consider the hourly fee structure outrageous. They feel that the lawyers literally have a license to steal.
If payment is not forthcoming, there are other options available. One can take matters into their own hand, purchase an authoritative and professional debt judgment collection manual and follow through in the process of getting their money back. The methods are easy enough to follow and not complicated. This is not rocket science. No higher math skills are needed.
Accounts Retrievable Systems - Debt Collection Services
It is very common for a business to have unpaid receivables, but allowing these to remain outstanding is not recommended. According to the Small Business Administration, 75 percent of U.S. businesses have customers that either pay invoices late or never pay them. In these situations, the business will attempt to either recover the money itself or hire a collection agency to do so.
Using internal staff to send follow up invoices and letters can be a productive approach within the first 30 to 90 days that the invoices are due. Employees may even receive positive results from phone calls placed to customers who owe money. The lucky business will be able to collect most of its receivables this way without seeking an alternative debt recovery solution.
If there are a large amount of outstanding invoices or if these are more than 90 days past due, using internal resources becomes less attractive. Every moment employees spend performing a debt collection service is time taken away from their primary work responsibilities. Once a company has reached a point where it is forced to hire several staff members to handle only collection services, it should look for another answer.
Using a debt collection service to obtain money due from customers will allow the business to focus on growth and development. In this arrangement, the business provides the debt recovery agents with a legal right to collect the money on its behalf. The agency then keeps a percentage of the amount collected, which serves as its fee.
Debt collecting agencies are experts when it comes to getting customers to pay past due invoices. They know exactly when to call and what to say without violating any laws. These firms use computer software to find customers that have moved and left no forwarding address. They also use automated dialers in order to place one call after another, which allows them to be much more productive than the employees of the business could.
When a business is faced with many unpaid invoices or those that are over 90 days past due, it should consider moving the collection duties from internal staff to a collection agency. The debt recovery agents employed by the receivables service will free the business to focus on growth. Each entity will do what it does best and the result will be an influx of money to the business.
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.
