There is a time in every business story when managing the accounts receivable becomes too big for the core team. Many companies hire a collection agency to handle their problematic or delinquent accounts when that happens.

This can be a big help in alleviating some of the workload from your best people, allowing them to focus on what they do best. But if you aren’t careful and hire the wrong agency, it can also be a complete waste of time.

We have previously discussed strategies for evaluating your existing debt collection agency, but there are slightly different qualifications you should consider when evaluating an agency you have not previously worked with.

It can feel intimidating if this is your first time working with a commercial debt collection agency. Still, the entire process becomes much easier once you understand what you are looking for.

How Big is the Agency? Do They Have Experience?

One of the first things you will need to consider about a commercial debt collection agency is its size and the level of experience it brings to the table.

There are pros and cons to working with agencies of different sizes. Bigger agencies will present more resources, but smaller agencies can often provide better, more customized services.

Experience is the key here. And just because an agency has a ton of work doesn’t mean the people you will be working with have that experience. You will definitely want to dig in on that subject in your initial talks with the agency.

Does the Agency Have Experience Dealing with Customers Like Yours?

Building on the questions you ask the agency about their experience, you will want to explore whether they are specifically equipped to handle the type of clients that make up the bulk of your business.

In many cases, collections are collections, and this won’t make a huge difference. However, if you deal with a specific type of client, you have to ensure that the agency can talk to that client in a way that gets the desired results.

This can be especially true in many tech-related businesses, but it can also be an issue in industries like banking or construction, where a specific type of language is used in contracts, deals, and negotiations.

How Does the Agency’s Fee Structure Work?

Most business decisions eventually come down to money, and hiring a debt collection agency is no different. You need to hire the agency that will give you the most return on your investment in them, but that return could vary dramatically depending on their fee structure.

Most reputable agencies will work on a contingency basis, meaning you will not be required to pay them anything outside of a small percentage of the money they collect on your behalf. This can be good or bad, depending on precisely what you are looking to get out of the deal.

In most cases, having someone work on your accounts will offset your expenses of managing and attempting to collect from those customers, so calculate what you will save in payroll against those contingency fees.

Are They Going to Play by the Rules?

Any commercial debt collection agency you hire will act as a representative of your company. How will you feel about how they conduct business and how that reflects on you?

If you place a high value on your reputation, particularly with customers, you will want to make sure that the agency you hire has a pristine reputation and will do all collections on your behalf by the book.

What Are Their Current Clients Saying About Them?

One of the keys to understanding whether a collection agency is a good fit is to listen to what their current clients say about them. Dig through as many reviews and testimonials as you can find to get the most complete picture of the collection agency.

Many agencies will gladly introduce you to their clients for this purpose, and this can provide an immense amount of insight into how they operate and what you can expect from them.

Understand That Neither Side is Committing for Life

Any professional relationship needs to be a two-way street, so even if you commit to some sort of ongoing contract, there is always a way out if things do not meet your expectations.

That means you don’t have to overanalyze the decisions. If it doesn’t work out, there will always be other options.

If anyone you are considering working with doesn’t see things this way, then you are absolutely going to be in trouble and should run in the opposite direction as fast as you possibly can.

Finding and hiring the right commercial debt collection agency for your specific situation is no small task, so it should not be something you take lightly. Take the time to get to know a number of different options, and use these basic categories to guide your evaluation of each agency you consider.

Like anything else in the world, the more you put into finding the right collection agency, the more value you will be able to extract from that relationship throughout your time working together.