Questions to ask before hiring a commercial collection agency
No matter what the size of your business is, in order to make a profit of any type you cannot simply throw money out the door by giving away goods and services. You may wonder who in the world does this, but every time you extend credit and the customer does not pay, you are in essence giving your product away. The bottom line is that for every delinquent account you have, money is being stolen from you. This is why it’s necessary to hire a commercial collection agency to collect these delinquent accounts for you. Before you choose an agency to work with, consider the followings:
- Decide if the amount of debt owed warrants the involvement of a commercial collection agency. To do this, evaluate your accounts receivable. Next, calculate how much it will cost to employ the services of a commercial collection agency. Compare the debt to the cost of hiring the agency to see if the extra expense is worthwhile.
- Is the agency you are looking at one that follows the Fair Debt Collection Practices Act? How an agency goes about collecting your debt is a direct reflection on how you run your own company and the impact could be positive or negative depending on the practices of commercial collection agency.
- Is the agency you are looking at capable of doing a skip tracing? This practice allow the delinquent customer to be tracked down using several databases and can nail down the whereabouts of customers who have moved with no forwarding address or had their telephone number changed or disconnected.
- Is the agency you are looking at insured and licensed to perform their job duties? This is extremely important. It is also important to make sure that the agency you hire has Error and Omission insurance so all involved are protected in the event of a customer initiated lawsuit.
- What types of fees does the agency charge? Do commercial debt collectors work on commission or is there a flat rate fee required?