When there are multiple ways to collect money from debtors still sometimes you may need interference of professionals. If all your attempts to recover debts fail, and you face issues for recovering it, the only way out is hiring professionals or a third-party debt collection agency. Having said that, not all the agencies have the same repute and capacity to crack the hardest deals and you must get in touch with the best one considering the need of debt collection on your business operation.
Do an Extensive Research
The debt collection agencies have certain areas they serve and specialization on the same. Some have excellence in fund security, some have their strong skill on handling small or large businesses. If possible, try to explore the debt collection agencies and their unique skill set and operational area to find whom you want.
Legitimacy Verification
Different states and localities have different rules on collecting debts from a business or an individual. You must hire one who is accustomed with the rules different according to the states, well versed with the guidelines and laws of the United States.
Skip Tracing
Sometimes the debtors change their address, contact details and everything else that can lead the creditor to them for collecting defaults. The debt collection agencies have the right tools and databank and software to track down the debtors who have left their old address without forwarding the new one. This is more important when you are trying to reach one debtor personally and failing.
An Insured Agency
No matter how much research you have done from your done, the debt collection agencies may often take aggressive actions or steps or the debtor feels the agency has crossed their limits or acted in bad faith. In such cases, the debtor can sue the agency. Irrespective of the verdict of your case, you must not want to be liable for hiring the wrong agency. Check if the debt collector is insured. Otherwise in such cases, the debtor can drag you and the collector both to the court. This is often referred to as “Errors and Omissions Insurance”.
Fees and Contingency Cost Comparison
Once you’ve found a few collections agencies that might work for your business, it’s time to look into their costs. Here, it’s worth noting that the way in which agencies charge for their services can be very different and you should choose the one that’s right for you. Some common payment structures are as follows:
Once you have found an agency suitable, the next considerable is the cost. There could be multiple ways an agency determines their costs and you must choose the right fitted one for you. Here are the payment plans of the third-party debt collection agencies.
Flat Fee: Flat fee is straight forward cost that is often linked to pre-collection fees. This is usually small and typically charged before starting the debt collection process.
Contingency: This is the most common fees arrangement. Most debt collectors follow a “No Collection – No Fee” structure and under this one the agencies charge 25% to 45% commission of the recovered amount. The percentage depends on a few factors such as number of contacts made, how old the debt is and more.
Does the Agency Fit Your Needs?
Hire the agency that meets your requirements of the business. A collection agency that works for B2B debts would not be the right fee for customer-to-customer debts. Next, you have to outline what you need from the agency and your search will start from there. You may only need a collection service, pre-collection, billing, credit report, or consultation on account receivables.
Is the Agency Accustomed with Your Industry?
With so many collection agencies out there in the market, you should find one that have experience of debt collection on the industry you belong from. Make sure you are hiring agency that have worked in your niche, be it healthcare, utilities, government loan, credit card, mortgage, insurance or more. For many business owners, the experience of the third-party debt collection agency is the only detrimental factor while selecting. Moreover, the agency must be aware about the federal rules and guidelines.
Repute of Collection Agency
Any business be it a collection agency or anything else earns reputation due to the outstanding service they provide. So when you have heard good words in the market about an agency, there must have valid reasons. While reaching to the debtors, the agencies must be professional and polite while staying under the federal guide lines.
See us at Vital Solutions for your debt collection. We are in the business for long hours and our niche is mortgage, automotive, credit card, utility and government loan. If in these sectors you have loans bothering your business capital, certainly you can reach us.
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