Making the decision to work with a commercial debt collection agency is a big step for most small business owners. But that decision is relatively small compared to the task of deciding exactly which agency makes the most sense for your business.
Debt collection agencies come in all shapes and sizes, and partnering with one that is not a good fit for your business can be almost as stressful as collecting those outstanding debts on your own. In order to help you make sure that you identify the right agency for your situation, we have put together a list of factors to consider when you are evaluating your options.
One of the most important factors in the way that an agency will fit in with your business is the overall size of the agency. Some will be too massive to give your account the proper attention that it deserves. Others will be too far in the opposite direction and struggle to find the resources to properly service your operation.
If you are looking for a simple answer for the right size of a collection agency, you aren’t going to find one. The best approach is to speak with a couple different options about their size and what pros and cons that might have with respect to your account.
Account Acquisition Strategy
One area where you can get a cut and dry definition of what you are looking for is an agency’s client acquisition strategy. Many of the large agencies prefer to buy delinquent accounts in bulk and then utilize their vast resources to pursue all of them at the same time.
This bulk approach to debt collection works fine when you are tasked with a high number of accounts purchased for pennies on the dollar and only need to collect a small portion of them. But if you want to be sure that an agency is going to do everything in their power for your account specifically, a more personal approach is going to be necessary…and that starts with their account acquisition strategy.
Automated vs Personal Collections
In addition to the manner in which an agency acquires their accounts, you also want to have an understanding how they go about processing those accounts. Agencies that manage large numbers of accounts will employ tactics like automated phone messages that are far less effective on a per case basis.
Since you are only concerned about an agency delivering on your own collections, you are going to want to make sure that they are making the effort of having their people personally making contact with debtors.
Another area where many debt collection agencies disappoint is the customer service department. Everyone wants to hire an agency that can deliver the goods, but they also need to be able to communicate with you consistently.
Having the best collection agency in the world working your outstanding accounts won’t do you much good if you aren’t able to get ahold of them for regular updates.
The final crucial factor that differentiates collection agencies is how much they charge you and how up-front they are with you about those charges. Having an agency with a 100% collection rate won’t do you much good if they are charging you 110% for every dollar collected. At the same time, you don’t want to hire a completely incompetent agency even if they work for free.
Understanding what level of quality you are getting and having a clear definition of what that quality is going to cost you is a key factor in hiring any collection agency. Make sure that you know what you are getting yourself into, and if things start to drift away from your agreement, get out of that partnership fast.
Hiring a commercial debt collection agency to represent your company is no small task. In order to make sure that you find the perfect partner for your business, you should carefully consider each of these five factors. And if the agency you are considering doesn’t meet your expectations in any of these areas, you should know that Direct Recovery does.