How to Choose the right Debt Collection Agency
“Debt is one person’s liability, but another person’s asset.” – Paul Krugman
When it comes to collecting payments from difficult customers, the assistance and advice from a debt collection agency can be a great help. But choosing the right one to support your business and get the desired results can be a difficult decision.
Here are some questions you should put to your potential debt collection agency to make a more informed decision as to whom to appoint and improve recovery rates:
1. Do you understand my business sector?
Every business is different, with varying challenges and either contractual or regulatory requirements that must be adhered to when it comes to recovery of accounts.
Knowing these contractual and/or regulatory requirements can make a real difference when it comes to successfully collecting money. A debt collection agency that knows your industry and its challenges can bring knowledge and experience of working with similar organisations, with a track record of producing successful outcomes.
2. How long have you been providing debt recovery services and to whom?
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Whilst trading time does not always mean success, it can be a good indicator of how successful they are and how much experience they have of collecting payments from difficult customers.
Don’t just take their word for it though. Request details of their client base, references, testimonials and key personnel profiles to gauge what others think about their services.
3. What accreditations do you have?
It is wise to check for associations and affiliations with the leading industrial bodies, for example a law firm should be registered with the Solicitors Regulations Authority and have additional accreditations, such as ISO and LEXCEL.
See if they are members of recognised industry bodies, such as Civil Court Users Association (CCUA) and Chartered Institute of Credit Management (CICM). Such accreditations can provide you with reassurance that they are subject to codes of conduct and disciplinary procedures that will ensure they operate to the highest standards.
4. What is their fee structure?
Different debt collection agencies charge different fees for their services. Some will require a fixed fee, whilst others will charge a success-based fee. Either way, the important factor is that you have full transparency and there are no hidden costs. You will want to know exactly what the fee is and when is it to be charged.
This is particularly important should your case need to be escalated to the legal process – so that you are in a position to consider the commercial aspects of taking such action.
5. What collection methods do you use?
Each debt collection agency will adopt different methods of recovery. Some will only provide pre-legal collection services, using their knowledge and reputation to bring positive conclusions before court proceedings are issued, when the matter is referred to another agent. Others will provide a complete “one stop shop”, using both pre-legal and legal procedures to bring positive outcomes. It’s important to find a company that will listen to you and provide a service that meets your requirements, whilst preserving your reputation and brand.
6. How will you notify me of progress?
Does the debt collection agency offer an on-line portal service where you will be able to log in and track their progress? Will you have a dedicated point of contact who can assist with your enquiries? Will they provide regular updates? These are important aspects of the service that will give you the comfort required to ensure that accounts are progressing in a timely manner and the business is providing a service in a way that you would expect.
Summary of How to Choose the right Debt Collection Agency
Building a relationship with an external debt collection firm experienced in your area of debt recovery is essential, so that you can move quickly when the need to “escalate” arises.
You may only need your agency to send an overdue customer one letter to obtain payment however, it is also important that your agency can provide a range of legal debt recovery services and provide commercial advice on the merits of issuing legal proceedings.
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