How to Select the Right Collection Agency
Collecting receivables is an important step in ensuring a healthy cash flow for a business, and more so for a home-based business or solo entrepreneur. But how do you choose the right collection agency?
American Profit Recovery suggests making sure that the qualities are factors when deciding to retain a third-party collection agency:
- Member of ACA International; The Association of Credit and Collection Professionals. Make sure the collection agency you are talking to is a member and that they subscribe to and follow their Code of Ethics. www.acainternational.org.
- Personal Referrals: As with anyone looking for someone to do business with, always ask around. Talk with other business owners or members of your local Chamber of commerce to find an agency that others you know may have used.
- Educated Workforce: When interviewing the representative from a collection agency, ask them their philosophy of who they hire. Do they hire college educated people or do they just bring in anyone to fill a position?
- Different Approaches: Does the agency you are talking to have several methods of collecting on past due debt? The agency should offer a low cost flat-fee structure along with other proven methods.
- Record of Community Service: make sure the collection agency you are hiring has a record of community service. The agency should have a track record of giving back to the community in some way.
- Background Check: It is imperative that the agency you are dealing with and may be calling on your customers pursues background check as part of their normal hiring practices. Anything less is not acceptable.
AllBusiness.com also recommends that:
- Choose members of the American Collectors Association or the Commercial Law League of America., as both associations require that their members adhere to a code of ethics and are familiar with the Fair Debt Collection Practices Act. Both associations also provide ongoing education for their members.
- Ask for proof of insurance. Most licensed collection agencies are required to carry bonds for their particular state and Errors and Omissions insurance, which protects both the agency and client for any errors made by the collection agency.
- Ask about the recovery rate of an agency. Ask for references to verify the percentage.
- Check to see how long it took the agency to collect and if they collected the whole debt or just a portion of what was owed
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