Important Considerations When Hiring A Collection Agency

If collections are a part of your responsibility, chances are good that at some point you’ll want to hire an outside collection agency. Debt collection is a job best handled by professionals, and since you rarely have to pay a collection agency up front, hiring one frees you up to do other things that are more in the line of business building. But how do you pick the right collection agency? Following are some things to look for.

Collection agencies use two kinds of fee structures. Some of them send you a bill each month, while others take their money out of the funds they recover for you. The latter is clearly preferable, because it doesn’t cost you money upfront and it shows you that they have confidence in their ability to collect. There’s really no reason to pay fees up front to a collection agency when so many of them don’t require it.

Some agencies belong to professional collection associations, while others do not. There are two such groups in the US, the Commercial Law League of America and the American Collectors Association. It’s preferable to hire a member firm for collections because they take their professional standing seriously.

In order to be a member of one of these associations, a collection agency has to act within strict professional ethics and adhere to the Fair Debt Collection Practices Act. In addition, both organizations provide continuing education courses for their members, so a collection agency that belongs to one of these two groups is preferable to one that doesn’t.

In addition, collection agencies that belong to professional organizations are more likely to do their own work rather than outsourcing it. This is important because you want accountability regarding your accounts. If you don’t know the people who are actually performing the collections you can’t really keep an eye on them.

Another thing to ask when you’re interviewing collection agencies is whether or not they make use of private investigation firms or software. Sometimes the hardest part of the collections process is locating the client. It’s absolutely imperative to pick a collections firm that will go the extra mile and hunt the debtor down if the current phone number and address you have for them isn’t working.

Agencies that incorporate private investigative services into their offerings are also preferable. One of the most difficult parts of the collections job is tracking down missing debtors. An agency that incorporates investigations into the services they offer you will cost less and be more efficient than one who has to outsource their investigations or one who doesn’t do investigations at all.

Finally, make sure your collection agency has staff working outside of standard business hours in order to maximize your collections efforts. If you have collections all over the country it’s better to hire an agency with offices nationwide in order to deal with disparate time zones. Even if all of your collections are local, make sure the collection agency has some people who work early and some who work late, because collections calls outside of the 9-5 time frame are usually more successful.

David P. Montana has three decades experience as an industry professional, business consultant and published writer in debt collection agency services. David offers more beneficial tools and resources about nationwide debt collection agency services.