Accounts Retrievable Systems - Debt Collection Agency
To manage a business beneficially, every owner has to stay ahead of their receivables and verify their cash flow. Whether you endorse an item for consumption or put forward a service, you most likely have to cope up with the late-paying or non-paying clients, from time to time. That means, you should have a sound, dependable internal debt recovery strategy prepared, all the time. Part of your strategy should incorporate, knowing when to outsource difficult accounts to a debt collection agency.
One can always sign up an international debt collection agency, when in need to recuperate debts from an international client.
When hiring a debt collection agency, you have to make certain that they are approved in the countries where your debtors are placed. As collection rules can be different extensively, it’s to your benefit to look at collection agencies that are practiced internationally. Since we survive in such a transient society, and with people moving across country lines frequently, it’s better to be on familiar terms with a debt collection agency that is official in various countries and are proverbial with all the diverse rules and regulations. In reality, collection agencies can only gather debts in the countries they hold an authorization in.
Fee constitution for debt collection services can vary to a great extent with different collection agencies. A few put forward prepaid, flat fee provisions, at the same time as others charge, a share of any dues accumulated, normally with no upfront costs required. Still others can put forward some merger of the two. Conditional on your enterprise, there are advantages to either situation.
Make certain the debt collection agency you’re taking into consideration, spells out their fee arrangement clearly in writing.
As your expenses are set, you can furthermore turn over challenging accounts more rapidly, when there’s a better possibility for recuperating your money.
Again, the longer you wait, the trickier it is to gather.
Lastly, when making an allowance for a debt collection agency, you require considering them as an extension of your association. Considering as they will be accumulating your money and acting on your behalf. It’s also noteworthy that they replicate your organization’s viewpoint.
Information About Collection Agencies: Can I easily place large numbers of accounts for collection?
Accounts Retrievable Systems – Information About Collection Agencies
Yes. You can upload your accounts and associated backup documentation or you may securely forward to us via email a spreadsheet for import.
Can I include the fee paid to ARS in my collection assignment?
In most cases, no, the costs of collection may not be included in the actual debt.
Why do I need to send supporting documents?
Our attorney needs to be armed with basic information in order to communicate and demand money from your debtor. Proper documentation, forwarded right at the beginning of the collection process, allows the attorney to effectively handle the claim on your behalf.
How do I place an account for collection?
Click Here to “Submit a Claim” to complete our quick and easy online form, send us a fax, (516-783-5389), or email the information to us at Inquiry@AccountsRetrievable.com
What should I look for when I choose a collection agency for my small company?
The collection agency you choose should have a proven track record of success and integrity, they should be accountable and affiliated and they should have a well-placed position within the collection industry. ARS has a 24-year record of superior recovery results and excellent client relations. We are bonded and we remit via a trust account to insure that your funds are secure until they are in your hands. ARS is a member of several regulatory organizations in the collection industry.
Can I place a debt that is owed to me personally?
Yes.
What is the difference between a consumer debt and a commercial debt?
A consumer debt is money owed by an individual person for personal or household goods. A commercial debt is money owed by one business to another business.
Does ARS provide collection services to the healthcare field?
Accounts Retrievable Systems - Small Business Info
Businesses sometimes have to use the services of a collection agency in order to receive payment for goods or services from a customer or other business. A collection agency collects funds from unpaid invoices through a variety of different methods when a business itself is unable to collect on unpaid invoices.
Often, a collection agency exists within a legal firm so that collection agents can use legal means in order to collect on unpaid invoices. While there are many different methods to collect on unpaid invoices, many collections services can get invoices paid by simply writing a letter to the indebted client or business.
Many individuals and businesses will respond to a letter from a legal firm. However, if the collection agency is unable to get an invoice paid by using a letter alone, the collection service may file papers with the court to be able to collect unpaid funds. In this case, the unpaid funds may be collected from the company’s or individual’s income.
For many businesses, having access to a reliable and effective collection agency is an essential part of ensuring that their unpaid invoices are paid. When a business has outstanding and unpaid invoices, many businesses are not able to effectively manage their finances, including their payroll and other bills. Therefore, businesses need to be able to rely on the income from their invoices to continue to operate. Collection agencies can be an outstanding resource for businesses as they manage their finances and cash flow.
When looking for a collection agency, it is important for the business to be comfortable with the collection agency fees. All collection agencies may charge different rates for their services. Some collection agencies charge based on a percentage of the outstanding invoices that they pursue. This rate could vary by a huge amount from agency to agency, so businesses need to be sure that they select an agency that has a rate that they are comfortable with.
Other collection agencies charge a monthly retainer fee. For that retainer fee, the agency may agree to send a certain number of collection letters before a case is elevated. If an invoice is elevated to court, the collection agency may charge an additional fee to manage the case. Because there are so many different ways to pay the fees for a collection agency, it is important that a business is well-aware of all of the fees that could be involved when they enlist the services of an agency.
Also, when looking for a collection agency, it may be important to be sure that the collection agency that a business selects is able to use a variety of resources to pursue outstanding invoices, including legal means, but the agency should also be able to try to contact individuals personally through letters or phone calls.
Finding the right collection agency can ensure that a business is able to collect on outstanding invoices affordably so that it can maintain payroll, pay bills, and receive payment on outstanding debts. Therefore, businesses should be prepared to do due diligence when researching agencies so that they can find the right fit for their needs.
Accounts Retrievable Systems - Guide To Collection Agencies
Have you ever wrote a check and then realized that you did not have the funds to cover it? Well if you do not make those funds available before the merchants deposits the check; chances are that check can go to a company like this particular collection agency. Once the company receives your check, there is a process that your check will go through before you are contacted. First, the check will go through the data entry department. Once the information from the check is processed and input into their system, the information will be put into a queue for the collectors to go through and call.
In case you did not know, there is an incentive in collecting on debts. In most companies, you get a bonus for each debt that is collected. So when the collector is contacting you, they have motivation to try everything that can legally be done to get you to pay the debt.
Debt collectors have certain protocols that they have set in place to protect them as individuals and the company they are working for. However, as a consumer, you have rights as well. It is illegal for a collector or the company that they work for to violate any law that is in The Fair Debt Collection Practices Act. This act is in place to prohibit abusive practices by debt collectors. The Federal Trade Commission carries out this act.
A collector is allowed to use a desk name. This is basically an alias that they can use to instead of using their government names. Chances are, the collector that is contacting you and sometimes on the verge of harassing you, the name they are giving you is not their real names. A collector is also allowed to call you anytime between the hours of 8am and 9pm local time, and they can call you as much as they want (at work or at home) unless you have specifically told them that they cannot call you during a certain time or at a certain location.
If you want a collector to cease all communication with you, most times, you have to send them a letter explaining that you wish to cease communication. At that time, the only other contact that can be made from them to you is to inform you that the letter was received and what steps they may take after the cease communication goes into effect.
Some collection agencies have understanding collectors and then there are some agencies that have collector who have the mindset as if you owe the money directly to them and they will do anything to collect on that. Just remember, as the consumer, you have rights and anytime you feel you have been harassed or the law has been broken, report them. The collector is just as responsible for their actions as the agency they work for.
Accounts Retrievable Systems - Fair Debt Collection Act
What is the Fair Debt Collection Practices Act?
In today’s economy more and more people are being laid off or fired and this leads to more and more past due debts. We are seeing record levels of charge offs by bank in terms of credit card receivables. The levels of foreclosures are higher than at any time in the past. Automobile loan delinquencies are at record levels as well. In fact all across the board consumers as falling past due on credit cards, mortgage payments, lines of credits, auto loans, department store charges as well as any other type of debt you can think of.
Well having said that there is a certain class of workers that is not affected by the economy and that happens to be debt collectors. That’s right. Those are the people calling you when you fall past due on your debts. You will probably receive some reminder calls and depending on the severity of your delinquency you could also receive some not so nice letters asking you to pay or make contact with the creditor so that arrangements can be made.
In today’s economy you are going to find that debt collectors are more willing to work with you because most companies do not want to see more of their receivables being charged off to bad debt. Most will even settle with you for pennies on the dollar.
There was a time in the past when this was not the status quo. In times past debt collectors would call and make threats and demands in order to get you to pay a past due debt. Some threatened you with bodily harm while others claimed you would have to spend some time in jail for not paying your debts. In other cases you would receive phone calls at all times of the night including visitations to your front door. Basically anything was acceptable when it came time to collect a debt.
Well because of this outrageous behavior the government enacted a program called the fair debt collection practices act which basically governs the activities of third party debt collectors.
There are some things that they cannot do such as the following:
Calling hours:
Debt collectors are required to call you between the times of 8:00 am until 9:00 pm eastern standard time. This ensures that you don’t receive calls at 10:00 pm or at 7:00 am in the early am
Calling your Job:
Debt collectors cannot call your job if you request that they do not. However it is always best to put such a request in writing.
Threats:
Debt collectors cannot make a threat that they do not intend to carry out.
Friends and neighbors:
In the past debt collectors would call your friends, relatives, and references and disclose your information to them primarily the fact that you are past due on your debts. They would use this as a leverage to get you to pay. Well today they can call your friends and relatives and leave a message but they cannot disclose the nature of the call.
Deceptive practices:
Debt collectors cannot use any type of deceptive manner in order to get you to pay your debt.
Jail time:
They cannot threaten you with jail time.
If a collection agency calls you they must state that the purpose of the call is to collect a debt and any information received from you will be used for that purpose.
Accounts Retrievable Systems - Collection Agency vs Lawsuit
If all you have to do to collect overdue payments from a delinquent debtor is sue them, they why doesn’t everybody sue? The short answer is that lawsuits aren’t always necessary, they’re expensive, and time consuming. You will likely be able to recover a large majority of your debts without having to resort to a lawsuit.
Rather than sue a debtor who refuses to pay you back, you can hire a collection agency. Collection agencies specialize in getting non-paying parties to repay what they owe. As service providers for your business, collection agencies can also help you in determining whether or not a lawsuit is the right option at the right time.
Another important factor in choosing a collection agency over a lawsuit is the service collection agencies can provide you. On such service is “skip tracing”. To sue a party, you need to serve them with a summons. Attorneys don’t generally specialize in finding debtors who’ve left town without a trace.
However, collection agencies are equipped to do just that. Once they find the delinquent party, then perhaps you may wish to pursue legal action. Short from that, you still need to know where your debtor is before you can serve him or her with a summons.
The legal system itself is not a fast moving entity. As time passes, your chances of being paid back reduce drastically. After 90 days, your chances drop significantly. The legal process allows for a lot of time to pass between each phase. Therefore, a lawsuit can take well over 90 days to progress. Rather than waiting all this time, you’ll find hiring a collection agency before the 90 day drop-off period significantly increases your chance of being repaid.
Before you resort to a lawsuit, you’ll find hiring a collection agency to be a better starting point in debt recovery. There are cases when hiring an attorney becomes necessary, though. If the debtor is especially stubborn and you’re not able to collect on the debt, then turning to a collection attorney may be your only resort.
At this point, the debt is likely way past the 90 day drop-off point. In some cases, if you’re already starting with a high debt that’s extremely late, you may wish to go ahead and start with an attorney right away and forgo hiring a collection agency. These cases will likely be few and far between, but they may exist.
By using an attorney to file a lawsuit, you significantly increase your chances of debt recovery significantly increase. Once the lawsuit produces a judgment against a debtor, there are many ways you can recover the money owed you. In most (but not all) states, the lawsuit will allow you to garner wages to collect on the debt. You may also be able to seize liquid or non-liquid assets from the debtor to alleviate the debt they owe you.
Overall, your first recourse in debt recovery should more than likely be to use a collection agency. They’re quick and effective. For the stubborn debts that just won’t get paid, you may need to resort to a lawsuit.
Accounts Retrievable Systems - Collection Agency Fees
Collection agencies are in the business to make money, so they’re going to charge you fees for their services. You’re in the business of getting paid for the services and products you provided your delinquent customers, so you’ll find you may need to pay for the services of a collection agency.
When you do hire a collection agency, you’re going to want to be aware of how the fees work. Collection agencies have a variety of ways of charging for the work they do. One way an agency might collect a fee is through “debt buying” where the agency purchases the debt in whole from the original creditor. The agency purchases the debt for a significantly lower amount than the debtor owes, and the original creditor gets to write off the loss on their taxes.
Once an agency purchases the debt, they go after the debtor and attempt to collect the debt, keeping the amount collected. Generally larger corporations sell their debt. Smaller organizations may find they’ll save more money by hiring an agency to collect rather than selling the debt.
Collection agencies vary greatly in their fee structure and policies. Some charge a simple flat rate for their services. Others charge a percentage of the debt collected.
While flat-rate collection agency fees may seem enticing at first, you should be very careful when considering a flat-rate agency. You may find the actual services you receive for you “small” flat-rate are far less than you originally envisioned when you hired the company. For example, you may pay a small fee and all the collection agency does is send out a specific number of letters to the debtor. That’s it. If the debtor doesn’t pay, you’ve paid for the service they’ve provided. Nothing else happens and you’re still stuck with an unpaid debt.
A flat-rate agency has no further incentive to work on your behalf once you’ve paid the fee and they fulfill their contractual agreement with you. Why should they bother?
You may also find a flat rate agency will provide only a specific set of services for a flat fee and then the additional services, which are very likely required, will cost more than originally anticipated. Of course, you’ll then find that the percentage of creditors needing these pricey additional services is much higher than you thought – and you’re among those in that percentage.
Another fee structure is the percentage-based collection agency fee. In this case, the collection agency charges a percentage of the amount collected as their fee. Since the agency’s very existence depends on their ability to perform and collect on your debt, you’re much more likely to get the full range of services from a percentage-based agency than from a flat-rate agency.
Be careful in choosing a percentage-based agency, though. You may be tempted to select an agency with a lower recovery rate because their percentage is lower. In the final analysis, however, you will very likely find the more expensive agencies with higher recovery rates will actually bring in more money than the less expensive agencies.
Carefully choose your collection agency and let the fee structure be secondary to your selection. Avoid flat-rate agencies unless you’re certain the services that agency provides for the fee are exactly what you need and no more. Don’t be afraid to go with a more expensive collection agency if they have a higher recovery rate. You’ll end up with more of your debt repaid that way.
Accounts Retrievable Systems - Looking For A Collection Agency
Collection agencies, as a whole, don’t necessarily have the best reputation as business entities. In fact, you’d be hard pressed to find any individual or business excited about the possibility of being contacted by a collection agency.
Often, even having an overdue bill sent to a collection agency is enough to entice a would-be “ne’er do well” to see the light and pay back what they owe. While such a reputation might be a good thing (as it gets the delinquent party to repay), there is also a negative side to this reputation.
As a reputable business, you want to ensure that other businesses you use to represent you are also reputable and have a good standing in the business community. It’s a fact. Businesses you hire to represent you also reflect upon you – whether that reflection is positive or negative. You want to keep that image as positive as possible.
Therefore, one of the major factors you should consider when looking for a collection agency is reputation. You want a collection agency that has a solid reputation in the business.
Another major factor is experience. You don’t want to hire a collection agency that’s going to fumble the process and leave you out of the money owed. You want an agency that has a proven track record of getting the job done and deliver to you the expected performance.
Methodology is also important. When investigating a collection agency, ask what kinds of communication methods they use to contact the delinquent party. Do the use mail? Ask to look at the various form letters. Look at their phone scripts to see how the agency will be speaking to your overdue debtors.
Does the agency “do its homework” on each of the debts they work to collect? How thorough are they in understanding the details behind the debt and the relationship between you and the debtor? The more detail oriented the agency is, the more likely they’ll be able to handle the debt collection effectively.
Individual debtors will sometimes “skip town” by moving from one geographical location to another to avoid repaying a debt. The term for finding these individuals is called “skip tracing”. Check and see if the agency you’re considering has a way to “skip trace” these delinquents. If so, find out how they do it and how effective their method is.
Some states require a collection agency to be licensed in that state to practice. Make sure the agency you chose is able to collect from the parties in the states from which you need debt collected.
Along with licensing, a collection agency should be insured. An insurance policy collection agencies can obtain, An Errors and Omissions Liability Insurance Policy, can protect not only the agency itself, it can also protect you. This policy protects the collection agency and you from debtor lawsuits. Debtors may sometimes decide to sue for imagined harassment. Check to see if the agency you’re considering has an up-to-date policy.
Shop around before you make a decision. If possible, visit the collection agency and talk to them to get a better feel for how they work. Definitely ask for references. You want your experience with a collection agency to be a good one, so make sure you consider your decision well before making it.
Accounts Retrievable Systems - Debt Collection Process
There are two aspects of the debt collection process. There’s the creditor-process and the debtor-process – depending on the “point of view” of the party involved in the process. Both sides should not only be aware of the process that directly affects them, but they should also be aware of the process concerning the other side.
Various state and federal laws govern much of the creditor process. The primary federal law governing debt collection practices is the Fair Debt Collection Practices Act. Reputable debt collection agencies will follow the rules provided by this law. The government can severely penalize any collection agencies who fail to follow the codes specified by this Act.
State laws primarily govern items such as timelines where the debt collection agency is allowed to perform such actions as take the debtor to court, etc. Likewise, state laws might govern certain practices pertaining to contacting the debtor. For example, some states don’t allow the collection agency to contact anyone except for the specific person owing the debt. This means if that person’s spouse answers the phone, the agency can’t tell the spouse what the call is about.
Generally, though, the debt collection process first involves information collection. The collection agency needs to know as much as possible about the debtor, the debt, how it was incurred, what the debtor and creditor agreed to, what has transpired since the debt has gone delinquent, and any other pertinent information.
Once the collection agency has gathered this important information, the agency will formulate an appropriate plan. The plan will likely depend upon information gathered — has the debtor been cooperative in the past or have they been difficult to contact or deal with, and so forth.
From this point on, the collection process is almost entirely in the hands of the collection agency. They can proceed as their business practices dictate up to and including filing a lawsuit against the debtor to finally recover what they can of the debt.
For the debtor, the process is one where the debtor is on the receiving end of the initial communications. Depending on how the debtor responds to the collection process, the debtor may also be involved in initiation communications with the agency or creditor.
During the collection process, the debtor can expect to be contacted by the collection agency by either mail or phone. The letters sent are usually form letters explaining what the communication is about and providing information for the debtor to contact the agency and also ensure the information the agency has is correct.
Phone calls may or may not be scripted, depending on the agency and the experience level of the phone personnel. The caller will usually begin with an introduction and attempt to draw the debtor into a discussion concerning the debt in question. Once the caller establishes a rapport with the debtor, they will discuss repayment. Depending on the collection agency and how they do business, the caller may also discuss additional repayment options available to the debtor. Collection agency phone callers are generally trained to deal with the various responses the debtor may give them, so there are many possible paths the phone conversation may travel down.
Finally, the collection process may end up with the debtor being served a Summons and Complaint which begins the legal lawsuit process. Once this process begins, the agency is much more likely to recover some or all of the debt.
Regardless of the exact path the debt collection process may take, the overall goal is to collect on a delinquent debt. This process provides for a reliable method by which collection agencies are able to reliably recover a significant portion owed.
Accounts Retrievable Systems - Working With A Collection Agency
Working With a Collection Agency
Once you decide on a collection agency, use their forms to list accounts or their format to upload accounts electronically. Give as much information as possible-accurate information about the account will improve collections.
In all cases, the minimum information should include:
• The correct name, address and telephone number of the debtor
• Name of the debtor’s spouse, if applicable
• Whether mail has been returned
• Debtor’s and/or spouse’s occupation or last known occupation and phone number
• Names of relatives, friends, neighbors and references
• Summary of any disputes
• Date of last transaction, order or payment
• Cellular phone, fax, e-mail address
• Nicknames or aliases, maiden name
If you have had all new customers fill out a credit application, all of the above information should be listed on there. The summary of disputes would be in the computer notes for the customer’s account. This makes it very easy–all the information you need, basically all in one place, on one piece of paper. This is one of the reasons why a credit application is so important. Cooperate with your collection agency. Rely on their experience, diligence, and judgment for the best and quickest results and promptly refer any contact from the debtor to the collection agency. Make sure that your collection agency is familiar with the nature of your goods or services–some agencies even specialize in collecting on specific services. For example, you might find an agency that only collects on delinquent auto loans, or medical bills, or hot tub sales. If you find an agency that specializes in your field, check them out; there is a reason they only do those types of collections. Don’t place any accounts with more than one agency. Make sure that if you change collection agencies, the accounts are only being worked on by one agency. Collection agencies’ fees are based on results, not on time spent on the account. Don’t expect payments to be made immediately.
How Collection Agencies Get Paid
Most collection agencies charge a commission or percentage based on the many factors of the accounts they are trying to collect. Some agencies charge a flat monthly fee, and some charge per letter or call.
If an agency charges a commission, it will normally be a percentage for “standard” accounts. That would be accounts that are maybe 60 days old, have a good address and phone number, and the debt is probably collectible. My collection rate was 25 percent when I owned my agency. That was for everyday accounts my clients placed. If they had an account that was under $75 or over one year old, I charged a 50-percent commission. When I had a large client placing many accounts weekly or monthly, I would give them a special flat rate of 18 percent on all accounts across the board.
Some agencies will charge a flat monthly fee based on the number of accounts you place, how frequently you place them, the dollar amounts, and age. They also may charge per letter or per phone call and let you decide the frequency of each. Collection agencies may also offer other paid services at a flat fee. Check out their websites and compare to see what the average fee structure is and what works for you and your business.
HowItWill Affect Your Business
If you decide to turn your delinquent accounts over to a collection agency, be prepared for the customer to call you. This doesn’t always happen, but it has been my experience that they will call the business owner to try to work something out once the account has been placed with an agency. Once you place the account with an agency, all contacts must be referred back to the agency. If the debtor calls you, explain to them the account is with a collection agency and they have to call them. You can always brush off the discomfort of the call by saying, “My bookkeeper, accountant, (anyone but you) is handling my accounts and the policy is anything over 60 days is placed for collections.” Once you hang up, e-mail or call your collection agency and let them know the debtor contacted you. If you receive mail or payments from the debtor, forward them to the agency.
Sometimes a customer will come back to you for services or products after they have paid a collection agency. Do not extend credit to this customer. Once you place an account with a collection agency, only accept cash payments up front. That customer cost you money when they didn’t pay their bill; if they continue to purchase from you and have to pay cash, you might recoup your losses.
Collection Agency Payments and Updates
Most collection agencies send payments once a month and some twice a month. Quite a few agencies even offer online updates on the payments and status of your accounts that they are working on. You no longer have to wait a month to find out who paid; you can search online or even call for an update. Some business owners don’t understand when they place accounts with a collection agency, that doesn’t guarantee the debt will be paid and the agency certainly never guarantees a time frame for it to be paid.
When I owned my agency, I would have business owners place accounts with me and start calling me the next day to find out the status of the account and if it was paid. You have to remember, any money collected for you is money you thought you would not be able to collect without effort and time on your part. So once you place accounts, give the agency some time to process and work on the account. Agencies also have to give the debtor 30 days by law to request verification of the debt and/or dispute the debt.
