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Collections Agencies Purchasing Overview
Collections agencies work to retrieve your bad debts — money that is owed to you that you are unable to collect. A collections agency's tactics and behavior will reflect on your company, so make sure you select one that maintains a good success rate while presenting a respectable image.
Credit collection companies work by asking debtors to pay their bills. For larger debts, companies typically send letters and make phone calls to the delinquent account. Smaller debts may not justify the cost of phone calls, limiting the credit collection agency to simply send collection letters.
Some business collections companies also offer services such as billing services, accounting, and other administrative functions, to complement their debt collection services. This can be an easy way to ease the burden on your accounting department.
Debt collection is usually done on a contingency basis. This means that the collection agent keeps a percentage of money that is collected — usually between 20% and 35%. Some collection agents vary their fee depending on the age of the debt, charging less for more recent debts and more for older ones.
While difficult to predict a commercial collections agency's success rate, you can still choose the right agent by looking for a few characteristics.
Look for agents with debt collection experience in your industry. They may have a better understanding of how to retrieve those funds. Also, review the letters they have used for previous business collections and look for professionalism and appropriate tone. For debtors who are particularly difficult to track down, see if the collections agencies handle "skiptracing". This involves searching a variety of databases to find these missing individuals. |
