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Collection Agencies Get You Paid
Your business depends on collecting the money it is owed. Unfortunately, those in debt are not in a position to readily pay you. What can you do if this happens to your business? Surely, ignoring the debt you are owed does not make for good business or a high number reflecting your gross revenue.
It is frustrating and time consuming for businesses to devote resources towards collecting their debts. For this reason, businesses look to outside collection services to perform the task for them.
Yes, the collection agencies do charge a fee on what they collect, but a company must consider if it is worth outsourcing to get some of their money rather than using their own in-house energies. Consider the following when making your decision.
How can collection agencies help my business?Collection agencies make it their business to contact debtors, alert them of their debt, and urge them to pay. Depending on the time frame of delinquency, collection agencies will send letters, make phone calls, or threaten legal action.
Collection agencies have a reputation for harassing debtors to pay. This is not a reality or very likely considering they must comply with the federal Fair Debt Collection Practices Act.
Collection agencies focus on claiming your debt, so your company does not have to live with a loss and can focus on other areas of your business.
When can I use a collection agency?Most businesses wait a time period of over sixty to ninety days until turning delinquent accounts over to a collection service, but this can be done as soon as thirty days expire. Once you transfer the account over to your collection agency, all of the communication to the debtor will be made through them.
Every instance with a debtor will be different. What time is the right time to turn them over? Consider it when they make grievances about paying, deny owing you money, do not make an effort to contact you, change their contact information without informing your company, etc.
Exercise your right of chooseThe greatest advantage of outsourcing is the freedom of choice. Get multiple quotes from collection services before making a final decision for your business. What factors should you consider in choosing your vendor? Consider the following.
- Can they supply you with good references? All companies are going to tell you they are premier. You will get more of a realistic critique from their former clients.
- Have they worked with a company in your industry before? The more experience they have with companies like yours, the better the return on investing in their services.
- How do they track down debtors in hiding? Ask them about their methods and success rates regarding finding lost debtors and collecting from them.
- Different states have varying regulations regarding the practice of debt collection. Be familiar with regulations in your state and those of your debtors.
- Ask about their pricing. Some collection agencies may keep a percentage as low as 10%, while others will retain up to 50% of the recovered funds.
- Get several quotes and it is possible to use multiple collection agencies, but not for the same accounts.