What to Look for in a Collection Agency


Choosing the commercial debt collection agency that is the best fit for you and your business can be an overwhelming task. Most people don’t have very much experience dealing with collection agencies, which leaves them somewhat confused when trying to determine which agency would be best suited to handle their needs.

Another problem that many people have when hiring a company to handle their bad debt collection is that they wait until they need the agency to start working and account to establish a relationship. Finding the ideal agency for your situation is something that is best done when there is no immediate pressure to get started on an account.

Here are five elements that you should expect to find in any legitimate collection agency:

Collection Credentials 

The collection agency you are hiring should be able to provide you with documentation that confirms they are licensed to conduct debt collections on your behalf. They should also be able to provide you with proof that they are bonded and insured. You might also want to see that they are members of various trade organizations.

While these types of credentials might not have any real impact on your collection, they prove that the agency you are considering is a legitimate business that intends to be around for the long haul. It also assures you that the agency has some investment in making sure that it collects your outstanding debts in an appropriate manner following any and all regulations.

Collection Track Record 

Another way for a commercial debt collection agency to prove its merit to you is through documentation of its track record with different types of debt collections. The more detailed information and statistics that an agency is able to provide you with, the more likely it is that you are dealing with a credible operation.

Using their past record, the agency should be able to give you a pretty good idea of what to expect from them if you were to hire them. Of course, great collection results are not necessarily worth it if the agency is using illegal tactics in order to get those numbers, so be wary of any track records that appear to be too good.

Fee Structure 

Most commercial debt collection agencies charge their clients based on contingency fees, which means that you only pay them if they are able to collect. However, the amount that you will pay for a collection can vary dramatically. The lowest rates are not always a good indication of the best company.

This is where your evaluation of the agency will have to take a subjective approach. You are going to want to compare the fees an agency charges with its track record and determine which combination is the best fit for your business.

Do They Return Your Calls? 

One of the best ways to get an idea of how an agency operates before you agree to work with them is to simply note whether they return your phone calls, and how quickly they do so. If they treat you in a prompt and respectful manner, there is a good chance that they will act the same way when conducting business on your behalf. If they can’t be bothered to call you back, then how hard can they be expected to work your collection accounts?


If you are dealing with a reputable debt collection agency, they should also be able to give you a list of references that you can contact to discuss their performance. When checking references, it is important to remember that the agency is obviously going to give you their most satisfied clients, but it should be a clear red flag if they don’t offer any at all.

Whether you are looking for an agency to handle a number of small bill collection issues or deal with one large outstanding account, you want to make sure that they agency you hire is a good fit for everything your company represents. That is why it is so important to make sure you take your time to get this decision right!

By |2017-09-16T12:20:36+00:00October 27th, 2014|Blog|0 Comments

About the Author:

Graduated from University of Utah - business degree 1990. Served in US Army as an interrogator / linguist, then as a tactical intelligence officer - Military Intelligence 1986-1990. Managed Western US sales operations for NY based collection agency 1990-1992. Founded Direct Recovery Associates, Inc. 1992-present