4 Tips to Working With a Collection Agency

Debt recovery is a potentially taxing, unnerving, and time-consuming undertaking hence the rising popularity of collection agency merchant accounts. Collection agencies hold clients financially responsible for outstanding bills. For better services, we recommend you secure engage a collection agency that acts as more of a partner than a contractor.

The importance of cultivating an excellent working relationship with your agency can’t be stressed enough. Work ethics dictate you hold regular meetings for status report updates to assess your account status.

This piece will explore on the various way to work with a collection agency.

1. Determine an agency’s legitimacy

Statistics reveal the existence of over 4,200 collection agencies in America alone! You’d expect a few unscrupulous agencies to account for a fair percentage of that figure.

Some collection agencies handle B2B collections, while others deal with consumer accounts. The more established collection firms often deal with both B2B and consumer accounts.

Ask for referrals from trusted business associates, your attorney, or accountant in your industry.

Another aspect to consider is licensed and bond status. In most states, regulations stipulate that collection agencies require to obtain either of bonded status or licensing and others both. Assuming you do business locally, hire a collection agency located in your State.

For cross-border business persons, find an agency that’s licensed in all states you conduct business.

2. Disclose information

The collection agency requires you to provide them with as much information as possible about a debtor. Full disclosure helps in raising the odds of obtaining the highest possible compensation.

The more debtor information you disclose, the more cash you stand to collect. Besides revealing your debtor’s name, you must furnish the debt collector with their telephone numbers and addresses.

Also share cell phone numbers and email addresses, physical address, spouse, neighbors, relatives, and friends.

Other information includes;

  • If the debtor has, in any way, responded to your collection inquiries
  • Nicknames, aliases, and maiden names of the debtor
  • Extensive details about the transaction or purchase, including the date and time- if need deemed necessary
  • Contracts signed and credit applications

3. Understand applicable regulations

The FDCPA (Fair Debt Collection Practices Act) guides the practices of collection agencies. As much as the debtor owes you, they remain protected from possible harassment. Agencies are known for employing aggressive tactics, pushing and bending laws to coerce people to meet their debt obligations. Understanding relevant laws will guide you during your collection exercises.

Refrain from hiring an agency renowned for using underhanded tactics.

4. Understand the cost of engaging a collection agency

Collection agencies recover your money at a price, meaning you must pay them a pre-agreed percentage of what’s recovered. In most cases, if your business receivables go past the 120-day mark, your chances of recovering your monies drop significantly.

Key takeaway

It’s vital that a collection agency doesn’t ruin the relationship with your customers by fulfilling their mandate as per the law. Hire a reputable agency to safeguard future business.