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Commercial Collection Agency – 5 Things to Consider When Hiring One
- Commercial Collection Agency
While there definitely are ways to avoid using a commercial collection agency, sometimes you have no choice. Running your business is what you excel at, after all, and dealing with recovering outstanding debts and delinquent accounts can consume your patience, time and resources. Calling in the professionals is often the best choice.
When looking for a commercial collection agency, it͛s important to remember that not all agencies are created equal, nor are they the right choice for your particular business. Here are 5 things to consider when choosing a commercial collection agency to partner with.
Commercial Collection Agency – 5 Things to Consider
Research. Commercial Collection Agencies will often specialize in particular fields. For example, one commercial collection agency might specialize in working with small and home-based businesses, while another made specialize in securing funds for large corporations. When possible, be sure to determine what size businesses the agency works with and what type of debtors they will go after
Insurance. No matter the level of research you do, you always run the risk of working with a commercial collections agency that uses ͞aggressive͟ debt collection tactics or leaves the debtor with the impressionthat the agency has acted in bad faith, leaving the debtor with the option to sue. No matter the outcome of the suit, whether you win or lose, you want to ensure that you will not be held liable for the actions of the agency. Always retain proof of insurance, otherwise know as ͞Error and Omission͟ ( or E and O͛s), from commercial collections agony you choose in the unlikely event both of you are taken to court by the debtor. Any good and reputable Commercial Collection Agency will be able to provide it for you.
Validity. Different rules apply for different commercial collection agencies in every state and locale. It is imperative that you verify that the agency you want to work with is licensed, bonded and adheres to the rules laid down in the Fair Debt Collections Act
Click Here to see our previous article entitled Understanding the Fair Debt Collections Act.
Debtor Recovery. Good commercial collections agencies will have at their disposal the ability to perform ͞Skip Tracing.͟ Otherwise known as debtor and fugitive recovery, Skip Tracing allows a commercialcollection agency to access several databases that provide them the ability to late a debtor who has ͞skipped town͟ and left no forwarding address; an important tactic to deploy should you find yourself unable to contact a debtor or have been repeatedly ignored.
Fees and Costs. Once you͛ve done your research and found a commercial collection agency that you would like to work with, you need to consider the costs associated with their services. Collection agencies can vary when it comes to charging for their services and it is important for you to choose the one that is right for you and your business. Two common payment structures are contingency and flat fee.
- Contingency: This payment arrangement type os typically what you will find. Most commercial collection agencies use a no collection no fee model and charge anywhere from 25-45% of the total amount of the debt. This amount is usually determined by the age of the debt and the amount of attempted contacts with the debtor that have been made.
- Flat Fee: A fairly small flat cost associated with a type of ͞Pre-collection͟ fees. This type of fee is usually offered early on in the debt collecting process.
It is important to keep in mind that once you hire a commercial collection agency, you won;t be receiving the full amount of the total outstanding debt. Consider exhausting all your options before hiring a debt collection agency.
Check out our previous article How to Avoid Using a Collection Agency for more information.
With that being said, as we mentioned at the start of this article, dealing with recovering outstanding debts and delinquent accounts can and will consume your patience, time and resources. Instead of allowing those accounts get away with not paying, calling in a professional commercial collection agency is often the best choice.
If you are a business owner trying to collect on past-due accounts, you may find the process quite frustruating. Turning accounts over to a collections agency may seem like a desperate step. But debt collection is a team effort, with you and the collection agency working together to accomplish the same goal: recovering your money. Contact The Stevens-Lloyd Group today so we can start working together right away.