There are many debt collection agencies in the world, so how do you know which is the best for your company to use? Know that choosing the right agency is extremely important, because there are many collection firms who use “strong arm tactics,” which will ruin your relationship with the customer. There are also many debt collection firms who are not professional operations. This not only means you have a smaller chance of collecting the debt, but also that any collection agency you hire afterward will have an even harder time collecting the bad debt.
Know that most debtors are good at what they do, and that is deceiving businesses and never paying their debts. This is a bad things for all sides, even the debtor. You need to choose a collection team that is professional and knows the tricks that debtors use. These tricks are hard to deal with if you are just stepping into the industry, but if you use a seasoned collection agency that is well versed in debtor tactics, you will have a better chance collecting your accounts receivables.
There are many debt collection agencies who use the letter writing tactic, which is not a bad tactic in and of itself. The problem is when a collection agency uses this tactic solely without the complement of other more direct approaches. We all know what we do with junk mail, paper and electronic, and a collections notice is nothing but junk mail to a debtor. You are most likely not the only one trying to collect from the debtor. So you must select an agency that will be proactive and persistent with your debts. A debt agency that is willing and committed to your company is the first sign of a good company. There are too many debt collection agencies who will disappear once they either collect or don’t collect your debt.
Look for a debt collection agency that is good at dealing with you, because they will deal with your delinquent accounts in a similar way. Good luck with your debt collection search!
The single most important factor in your getting your money back is to spend your money wisely on selecting the best debt collection agency. These agencies charge based on a lot of variables and in the end that may determine the price you pay for getting back the money owed to debtors.
Most of the debt collection agencies charge a percentage of the money they will be able to obtain for you for the delinquent accounts you have. This percentage can vary from say 10% and go up to as high as 50%. If these agencies cannot get you your money back then they will not charge you anything at all. But that is not all as these agencies will usually charge a percentage based on several factors relating to your delinquent accounts.
The older the accounts the more percentage they will charge from you as older accounts are very tough to get back money from and hence obviously higher the costs. The trickiest accounts are those which you have been trying to get back money from and were not able to get the money back at all. That means the debt collection agency will have to put up more work to wrangle the money back and hence the high cost.
The other costs which are involved in the whole process making long distance call, travel , filing fees or even doing background checks on certain people . All that is a separate cost from the percentage cost mentioned above. Most of the agencies charge these once the job is done but make sure to check the contract for any other hidden charges that may hit you. That is why the due diligence is important before selecting the correct collection agency. You can also make sure to have all costs included in one package and then let the agency charge a percentage fee. That may be easier on you as tracking all the separate costs can easily become a headache if you have a large number of unpaid accounts.
Some debt collection agencies may charge you higher fixed fee rather than percentage if you have say for example small amounts to be collected for large number of accounts . In this case the fixed fee is better rather than a percentage as you know what costs are involved and agencies also know what to expect as fees. If you go this route make sure to get some thing into the contract with regards to the success criteria else it may so happen that you do not get any money back but may need to pay the fees.
Most prospective clients for a debt collection agency tend to base their search on the amount the agency will charge. This is how most people search for services regardless of the industry. It’s just what human beings do. So rejoice and take delight if you do this, you are human.
One of the other things that goes along with being human is the ability to ration and reason and to know beyond a shadow of a doubt that when you hear something that is true, you will know it intrinsically.
So here’s the skinny about debt collection agencies and the process of hiring one.
A debt collection agency will attempt to lure you in with a low rate because they know low rate is what you’re shopping for. If you actually knew what was the best thing to shop for, you would probably be generating collection calls yourself. But since you don’t, and most people don’t by the way, know the inner workings of an agency and how they have perfected their craft, the most typical item to come up in your initial quest will be price. Price is a good starting point when looking for a collection agency, but it is not the end all thing to decide upon.
Rate shoppers get what they pay for. How much time can a collection agency put into your file to do it the right way at such a low rate? Rates are subjective and what one person thinks is low may differ drastically compared to another person’s view. What an agency owner like ours and what a layperson like yourself may think is ridiculous, may very well be two different things.
As a debt collection agency owner I must tell you that the amount of money invested into collecting a claim is directly proportionate to the outcome. Yes it is true that every once in a while, approximately 9% of the time, a letter will effectuate a collection. 9% is paltry. Which means, in effect, that 91% of the time no collection is made. And what unfortunately occurs when one engages such a process, the file is ultimately ruined for the next party who tries to collect. Both because of time, a desensitization to third-party intervention, and because quite frankly the debtor may have appropriated your funds.
To know the inner workings of a collection firm is helpful in knowing which firms are realistic about their fees and serious about staying in business themselves. Collection agencies that lure you in at a low fee, do almost nothing. They just about ruin the file and rely on a 9% ratio to collect- and they do not care about the other 91% of the time that you’re left holding a worthless piece of paper.
So when you’re choosing the right collection agency for your needs, make sure that not only price is the consideration but a variation of other factors. Factors such as how long have you been in business, expertise in a particular industry, size of the firm, expertise of the collector handling the claim, and so on and so forth.
Chasing up payments with clients is not only a hassle but time consuming also. Here, we’ve listed some of the major advantages of employing a debt collection agency to assist with outstanding payments your business is owed:
No payment unless the job is done: It can often feel like a bit of a risk employing a company to recover debt from someone you don’t think will pay. Therefore it would be easy to surmise that you will be more out of pocket due to the cost of employing the agency. Most debt collection agencies however do not take any fee unless they are able to collect the debt you are owed. So there is no risk of being more out of pocket.
Save on resources and money: There is no point in allocating staff members the job of chasing up payments when it is not the core of your business or their position. By outsourcing this to specialised professionals the job will be done faster as you will be employing people who do this full time and you also won’t be distracting current staff from their important tasks.
It will help you to keep focused on your business: There is nothing worse than spending half the day worrying and chasing up payments when there are other more important things you need to be doing. If you are debt collecting you aren’t expanding your business, finding new clients or assisting with the core services of your business, which is where your attention should be. By employing a debt collection agency to recover payments you are owed you are making sure you can stay focused on your business and ways of expansion.
Receive your cash sooner: By outsourcing your debt collecting to a company that specialises in debt recovery services you are almost guaranteed to receive your payment much sooner and faster than if you were to spend the time chasing up the payment yourself. This is definitely one case where leaving it to the experts is the way to go.
Possibly save on legal costs and further stress: If you have the hassle of having to chase up with phone calls and possible legal action in the future this will only create more stress for you. By employing a debt collection agency to handle all of this, you can focus on what’s really important and leave debit collecting to the experts.
Using a debt collection agency has many advantages for all types of business owners. What’s great about most debt collecting services is they will not charge you unless they are able to recover the debt so you have peace of mind you won’t simply be further out of pocket. I hope our list of advantages has given you a clearer picture of why debt recovery services can really assist small business’s with debt collecting. There really is nothing to lose and only your outstanding payments to gain.
Collection of debts is a daunting task. However, reliable and reputed debt collection agencies can solve this problem for you and get your money back in no time.
As it has been said, nobody should be trusted when it comes to money lending. Many loan facilitators provide loans like home, car, etc to the people and when they are unable to pay it back they become defaulters. Banks which issue credit cards to its customers often have to face such people who get a card issued on their name and use it; however they do not pay its outstanding dues on time. Such people are then levied with charges like late payment, finance charges, etc. If the charges are not paid back, the customers fall into the category of having a poor arrears history. In such cases, it usually becomes hard to get the money back from debtors. No matter how many times you threaten the defaulters, the result is unsatisfactory. However this situation now can come under control with the help of debt collection agencies.
What Is A Collection Agency?
Collection agencies are hired to recover bad debts which include credit consultants and debt collectors. This is done carefully so that you remain hassle free. These debt collection agencies collect debt for various businesses such as, Publishing, Finance, Education and Government Services, Hospitals, Transport, Retailing, Medical and Health care. The companies working in these sectors are highly benefited in guarding their money from the defaulters. Debt collection agencies are furnished with the required skills and resources to efficiently recover debt on time. These companies also follow stringent rules and regulations.
Why Debt Collection Agency?
Debt collection agencies work in a professional manner. They believe in reducing bad debt without harming the customer relationship and collect debt under a customer-friendly manner. Everything is done under supervision and complete attention is given to customer handling etiquette. They maintain the prestige of your company or the organization that has to collect the debt. It focuses on your business plans, helps you get rid of any legal hassles and safeguard your business.
Debt collection agencies usually have the benefit of getting a percentage of whatever they collect so they are able to recover more debt as collection on time. The employees working in these agencies are proficient, have extensive knowledge and are fully trained. They endeavor on achieving maximum returns and work under peculiar strategies. They ensure high collection success rates, comprehensive month end reporting and have an integrated collection system. Some of the agencies give you the liberty to pay only once the work is done.
When you are tired of chasing someone who will not pay, you will probably want to choose a debt collection agency. With so many out there, how do you choose? Considering this is an important decision and you still want to be getting your money the sooner the better, you should consider the following issues…
· Reputation of the Debt Collection Agency. Word of mouth is extremely important, especially now we have a variety of sources. The internet is always a good way to find out the good and the bad about any company. Look for forums and dig deeper into these forums to find out information that will not always come up on a search engine. There is often a lot of information inside forums and a way to communicate with those who have made claims or assertions. Take your time to do independent searches inside forums.
· Reporting of the Debt Collection Agency. You want to make sure the company you choose will have a system of reporting. Online reporting is highly recommended with regular updating so you can see what is going on.
· Reputable behavior. You want to make sure the debt collection agency that you choose uses proper standards of behavior when collecting debts. You should do research on this and make sure that the agency you are interested in is not one that has been in trouble before. You don’t want to find yourself in trouble with the law because you are now involved in some legal case where the agency has used illegal means to attempt your debt recovery.
· Industry. It is important that the provider has existing industry, so they understand the ins and outs of your industry. Again you should check with them regarding this and particularly requiring references from individuals or companies that have similar revenue streams as you.
· Remittance rules. This may sound a little strange, but you want to make sure the debt collector also pays you in a timely fashion. Some individuals have been in the situation where they have waited longer for the provider to pay them outstanding monies than they waited from a non-paying client in the first place.
· Cost. There are a number of ways that these debt collection companies can charge you for recovering your owed money. Some agencies want payment by the hour, others will buy your debt for a reduced value. This is a good way if you want to settle the amount owed to you immediately. Other debt collection agencies will work on a commission only or on a success fee, no collection no fee basis. This is the trend of many companies today.
Remember, you will be signing another agreement, and you can probably only take one path of action. You want to make sure that the agency is paying attention to your business and not just putting it in another to-do list. You need to make sure that you are being prioritized. The longer that you wait while waiting for the results of the agency you choose, the less chance that you will recover the money owed to you.
In today’s economy, it can be rough for businesses to actually collect what they are owed. Many people are unable to pay their debts at this time, even if they wanted to. The main problem is, most companies do not have the resources to devote the time and energy it takes to track down these debtors and negotiate with them to get what they are owed.
This is where a debt collection agency comes in. When a company hires a debt collection agency to collect on overdue accounts, the collection agency does all the legwork for the company. As a result, they will work hard to ensure that the debt will be made good and the company receives it’s money back, for a percentage of the collected fees. Because they only get paid when they collect, companies that hire debt collection agencies don’t have to risk anything to get back money they were unable to collect.
Essentially, a professional debt collection service should strive to create a dialogue with the debtor in the hopes of peacefully settling the debt. The debt collection agency will remind the debtor of the facts and convince them that it is in their best interests to pay off the debt. Ideally, once the debtor has been contacted, they will respond positively and either pay off their debt in full or work out a payment plan with the debt collector.
However, sometimes debtors will refuse to pay, try to ignore the collection service, or simply cannot be found. If this is the case, the debt collectors will work within the legal framework of debt collection to get them to cooperate. If the debtor has disappeared, the collection agency will track them down and negotiate with them as normal. If they ignore the company’s calls, most debt collection agencies have a few tricks up their sleeves to get them to respond. In the unlikely case of a debtor refusing to pay, they may have to submit a poor credit report to the major credit agencies, or even take the debtor to court if the amount owed is large enough. While these actions may be regrettable, they are necessary.
In most cases, the debt collection agency settles the debts in a peaceful manor, and the company gets money back that it ordinarily would not have received. Working with a collection service is therefore mutually beneficial for both parties; the collection agency collects the debts the company would have been unable to collect, and in return the company provides the agency with work.
Unless your business only takes cash, most businesses will encounter the problem of being stiffed for a payment, whether by accident, like a bounced check, or by a debtor neglecting their payments. It can be very difficult to collect on these overdue accounts without the proper legal training. That’s why most businesses hire a debt collection agency to take care of their unpaid accounts and collect them.
Unpaid accounts can be detrimental to a business. However, collecting these delinquent accounts can often save a business from going bankrupt. Since there are numerous laws in place in regards to fair debt collection practices which must be followed, it is often very difficult for untrained people to make the collections properly.
Hiring a commercial debt collection agency is the best way to collect on delinquent accounts. Most collection agencies take their fee out of the actual debt collection, so unless they actually get the debtor to pay up, they usually don’t get paid. They are also legally certified and usually protected by Errors and Omissions Insurance, which keeps your company safe in the event of a mistake. A professional collector will know the regulations and rules in fair debt collection, and they have experience in dealing with customers on a personal and professional level.
A commercial debt collection agency will know what to say and do to collect your unpaid accounts. Most agencies will talk with your overdue account holders and try to figure out why they were unable to pay what they owed. If they just could not afford the full bill, they’ll work with your customer to figure out a payment plan. If they just plain forgot about the debt in the first place, a commercial debt collection agency can often act as very persistent reminder.
Before hiring a commercial debt collection agency, you should do a little research to find the company that will work best for your company’s needs. If you ask other business owners in your industry for personal recommendations, they will often be more than happy to share the information with you. You should also make sure the collections company has experience in dealing with the type of accounts that you need collected on; A hair product distributor probably would not want to use a commercial debt collection agency that specializes in unpaid medical bills.
You also want to make sure that the commercial debt collection agency you are considering has a license to collect in your state. For example, my agency (Enterprise Debt Recovery) specializes in corporate accounts and is licensed in Illinois. This means that we can collect on overdue payments for corporations in the state of Illinois. Hiring a company in that is not licensed in your state could lead to serious legal repercussions in the future, so make sure that you do your research and find the agency that is right for your needs.
In closing, hiring a commercial debt collection agency is the best way to collect overdue accounts without wasting your company’s time and man-hours. By hiring a debt collection agency, you will be able to regenerate income that was once lost to you legally and safely.
What is a debt collection agency? A debt collection agency is a business whose sole purpose is to reclaim debts that are owed to individuals or businesses. This is the sole purpose of a debt collection agency and they have to be good at what they do, or else they will go out of business.
Why should you use a debt collection agency to get your bad debts paid? Well, if you are like most people, 24 hours are not enough to get your work done. On top of this, you would have to learn an entirely new skill, which takes more time. It may sound good to try and get the money back that is owed to you, and this may work on a couple of instances, but on a whole collection agencies can save you a low of time, money, and headaches in the long run. Many businesses use consultants and a debt collection agency is a consultant in a general sense. You are outsourcing a part of your business to the collection agency, because they are better at it and they end up saving you money in the long run. The industry that they work in is a hard industry and if they are in business, then they have successfully graduated from the school of hard knocks.
Debt Collection firms will have a higher percentage collecting your bad debts than you will. This is just like saying that a professional athlete will be better at their given sport. If you practice a skill or trait day in and day out, you are going to be more capable than the average person. This is another reason to turn your accounts receivables over to a debt collection firm.
Running a profitable business is a difficult undertaking, and it can be even more challenging when your customers do not pay you. Do what you can to collect the bad account, but before you spend too much time and energy, turn the file over for collection. You will be glad you did.
Every business, at one time or another, finds themselves in a situation where they need to collect unpaid debts from customers. This can be uncomfortable, especially for the small business owner who may have a more personal relationship with their clients. To avoid and unpleasant confrontation and get paid as soon as possible, consider using a commercial debt collection agency.
Many business owners do not think they need a debt collection agency to get their money for them. They believe that sending numerous letters and making phone calls will eventually get them results. This can become a big waste of time for someone who is already busy running a company. Handing the debt over to a collection agency to be recovered takes it out of their hands and frees them up to get their work done.
In most cases, a company has limited access to information about their clients. A debt collection agency has advanced technology that allows them to research a consumer before attempting to collect their debt. This way, they are fully informed when making suggestions or demands for those owing money. The extra information makes the entire debt collection process more efficient.
There are many other services available to clients of debt collection agencies, beyond simply contacting debtors and getting money. Many agencies will communicate with clients daily via fax or e-mail to provide updates on their situation. This includes alerts when a payment has been made or when a company has gone out of business.
A final demand letter is another service provided by collection agencies that let debtors know a business is serious about collecting the debt. A letter demanding repayment on the agencies letterhead lets a consumer know their situation is so serious, the company no longer wished to handle it. This can usually yield quick results and help avoid legal action.
If every other option has been explored and the debt has still not been recovered, legal action may be necessary. In this case, there are many collection agencies that will also handle the debt in the litigation stage. They have connections to several reputable collection lawyers and can find the best one for the situation. They will also act as the middle man so that a company needs only contact one person for all of their cases.
Nobody wants to end up in a situation where they have to chase their customers around just to be paid what they are owed. However, sometimes these situations are unavoidable and it can be a major inconvenience for a business owner to handle it alone. A commercial debt collection agency is the best way to get fast results with as little trouble as possible.
