Top Tips When Choosing a Debt Collection Agency
It is usual for businesses to extend credit to their customers. However, in some circumstances, customers are unable to repay their debts. Debt collection services are businesses that will collect your debts for a small commission. They are a viable solution as opposed to court processes that might take years. Read on to learn how to choose a debt collection low commission service for your business.
Examine the reputation of the collection agency by checking online reviews or interviewing some of its former clients. You may want to avoid agencies accused of mistreating debtors or increasing their service charges. The collection agency should be licenced to work in your locality. Agencies affiliated to professional associations observe a strict code of ethics.
Preferably, work with a collection agency specialising in your industry. It ensures that the agency understands your business operations and financial documents. The agency will require some paperwork to comprehend the circumstances under which the customer received credit and any mechanisms used to encourage the customer to repay his or her debt. The agency will also examine whether the unpaid debt has led to losses. For instance, if the customer had hired equipment, he or she could be liable for extra costs such as idle time.
What collection methods will the agency use? Some agencies will negotiate with the customer and come up with a repayment schedule. Others will opt for court processes. Regardless, the collection methods should not flout local and state laws. Remember that the agency represents your business. They could severely damage your reputation if they use unorthodox methods to collect the debt.
Work with agencies that have a friendly customer care department. For instance, you should have a contact person at the agency who gives regular updates regarding their progress. The agency should also ask for your input when formulating repayment plans with your customer. For example, there are cases when a customer could choose to forfeit an asset if they cannot repay the debt.
The agency should have a transparent and friendly pricing policy. Some agencies will have a no-win no-fee policy. As such, they will not charge you if the customer does not repay the debt. Others will require a small deposit before they can engage the customer. Compare the pricing strategies of a few agencies to understand industry rates. Most agencies will reduce their commission to attract new clients.
When choosing a debt collection low commission service, examine their reputation, industry knowledge, collection methods, customer service and pricing strategy.