If you’re a small business with limited staff, chances are you have so much to do and not enough time to do it all. From processing payroll to delegating tasks, just thinking about calling customers to ask for past due bills to be paid can be daunting. As an account ages, the chances of collecting on it decrease dramatically. Hiring a debt collection agency can save you time and will help you collect money on past due accounts. The key is to find a reputable and trusted agency to assist you in your debt collection efforts.
Here are a few signs that it’s time to hire a debt collection agency:
- A customer has broken more than two promises of payment.
- A customer’s telephone has been disconnected.
- A customer repeatedly asks for documentation even though it has already been provided several times previously. This is a common practice when someone is trying to delay payment.
- A customer indicates that he or she doesn’t want to follow the terms of sale.
- A customer indicates an inability to pay and refuses to provide a specific date for payment or isn’t willing to initiate a payment schedule.
If you’ve been experiencing any of these things, hiring a debt collection agency will be extremely valuable. Debt collection agencies have experience collecting delinquent debts. Here are three tips for choosing a debt collection agency:
Make sure the agency is licensed
Each state has their own laws regarding licensing, but you’ll want to make sure that whatever agency you choose is fully licensed, bonded and insured. If a debt collection agency isn’t licensed, you may be held liable if they violate any collection laws. You’ll want to make sure the agency is insured in case anything goes wrong, and it’s important that they’re bonded in the event of a lawsuit. You want to make sure that the collection agency can handle a lawsuit without it jeopardizing your business.
Check to see if they’re experienced in your industry
Debt collection agencies often specialize in certain areas. Some may excel in securing funds from large companies while others may have experience collecting medical payments. Find out what type of debtors the collection agency deals with most often and if they have collected debts in your industry. Additionally, find out how experienced they are in the type/age of debt that you need collected. Fourteen days past due is different than 180 days past due, and you’ll want to make sure they know how to handle your type of debt. If you need help finding a debt collection agency, reach out to your attorney, accountant and other business contacts for suggestions.
Find an agency that’s easy to communicate with
When you hire a debt collection agency, make sure they’re easy to communicate with and that they’re open and honest about their policies. Ask about their collection tactics and their fee structure. If they’re not willing to disclose this information, then you should look at working with a different agency. Collection agencies have a variety of fee structures. Some charge a flat fee while others charge contingency fees. You’ll want to know this fee structure ahead of time in order to avoid any surprises. Also, make sure that you have a designated point of contact. This will be helpful in case you have any questions or concerns regarding your account.
Using a debt collection agency can give you peace of mind knowing that someone is handling your debt collection while you focus on your business. Hiring an expert to collect past due debts can help you get paid faster and will help you move forward with your business.