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What You Must Know of Debt Collection Agencies before Hiring Them

What You Must Know of Debt Collection Agencies before Hiring Them
What You Must Know of Debt Collection Agencies before Hiring Them
There isn’t a business that hasn’t ever suffered from bad debt. The scale of bad debt is obviously different for different organizations. If it is small you can of course try managing it in-house or waiting for your clients to pay up. When it is sizable you can’t relax as piling bad debts has the potential to bring your business down by causing liquidity crunch. This is where you need to find a collection agency that would take care of collecting your debt. With so many agencies around making the right choice isn’t the easiest of tasks to do. So here we look at some of the things you need to know about debt collection agencies before hiring them that would ensure higher and speedier collection of your bad debt.
  • Track RecordThere are several debt collection agencies that have multiple lawsuits against them due to highhandedness in dealing with collection. It is a tricky territory where your rightful due collection attempt can come back to haunt you in the form of a lawsuit citing violation of rights. This is where it become important for you to carry out a thorough research on the kind of background an agency has in terms of debt collection.

  • Industry Expertise There are agencies that specialize in collecting for certain industry types. Some agencies have expertise in handling collection needs for startups and small businesses. It goes without saying that inherent knowledge of dealing with customers and clients of a certain industry helps in expediting the whole process. If the agency has catered to customers like yours in the past it is a big advantage.

  • Customer Treatment The last thing you’d want to do is spoil your reputation in the market and hurt the relationship you have with your customers. This is where you need to know the collection agency would approach the job. What are the steps they would take to inform your customers and will you be kept in the loop during the process.

  • Licensing – You’d surely not want to dig your grave by hiring a non-licensed debt collection agency but you need to be careful about the license part. If the agency is licensed to operate only in your state that may not be good enough if your debtors reside in other states. The best collection agency in the country would be licensed to operate in all the 50 states and sometimes they can offer you these services on an international scale.

  • Finding Missing Debtors – Dealing with debtors who have changed their location and phone numbers is the most challenging part of debt collection. The agency that you hire should have access to the latest tools that allow them to find out such debtors. They use methods like skip tracing to do so. If the agency isn’t competent in this you need to look for another door.

  • Fees and Cost – How would the agency charge you? This is one of the most important things to know when you are looking to hire the best debt collection agency. There are agencies that charge you a flat fee for their services while others charge you a percentage of the debt collected. You need to do the math and find out which among these is financially beneficial to you. Make sure there are no hidden charges for the services that they offer you.

When you keep these important things in mind you will be able to find the best collection agency and they will help in bringing down the problem of bad debt and helping you build up cash reserves that you need to grow your business and create the competitive edge in the market.

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