Despite the fact that there are several ways to avoid the debt collection process, at times you have to have a professional to take care of it. Why? Because you have a business to run and the truth is that dealing with those accounts can be strenuous, affecting time, resources, and patience.
It is important to know that not all credit collection service agencies CTL Law for example are equal, so you must choose an agency that is fit for your unique business. Here are five things you must consider when choosing the right partner in the process.
Debt collection agencies Sauvageau & Associates are set up differently and often specialise in certain areas. While some do extremely well in securing funds from large companies, others excel in working with small businesses or even home-businesses. As much as possible, find out what type of debtors the collection agency mainly deals with and what kind of businesses it currently serves.
Verify if the agency is legitimate.
Different rules apply for debt collection agencies in varying states and localities. Ensure that the one you want to hire is licensed, bonded, and follows the policies of the Fair Debt Collection Practices Act. Francois Sauvageau may also be a good start .
Inquire if the agency uses “Skip Tracing”.
Sometimes debtors move out to a different town without leaving a forwarding address. To resolve this problem, excellent collection agencies make use of the method “skip tracing”, which involves gaining access and using a number of databases that let them trace a debtor who has skipped town. This is particularly important if you’ve been personally trying to contact your debtor and have been frequently ignored.
Confirm that the agency has insurance.
Unfortunately, no amount of research can protect you from complications such as the possibility that the debtor feels the debt collection agency acted in bad faith or the likelihood of them using aggressive tactics against your debtor. In either of these cases, the debtor can sue. Whatever happens, you will want to make sure that you won’t be held responsible for hiring the agency. The best way around this is to obtain proof of insurance from your debt collector just in case your debtor takes you both to court.
Evaluate fees and contingency costs.
When you find a few collections agencies that you think might work for your unique business, the next step you need to take is evaluate and compare their costs to be able to choose which one is best for your business:
Some of the common payment structures include:
Flat Fee: A clear-cut cost usually comes with “pre-collection” fees and is frequently rather small. This type of payment structure is mainly offered early on in the debt collection process.
Contingency: This is generally the most common agreement between the business and the agency. A lot of collection agencies use a “No Collection - No Fee” system and may charge between 25% and 45% of the total sum of the collection, depending on the specifics of the account (like how old it is, or how many contacts have already been made, etc.).
Dealing with debtors can be exasperating, slow, and just difficult altogether. Most importantly, It can use up all your resources. So when you think you’re out of option, it is best to just hire a debt collector rather than simply letting your debtor get away.