Business owners, regardless of the size of the operation, are in business to make a profit, not give their money and/or services away. Uncollected debt affects the bottom line and steals focus from the business at hand. Before employing a commercial collection agency, consider the following:
1. Does the amount of outstanding debt warrant the use of a commercial collection agency? Evaluate your accounts receivable and calculate a dollar amount where hiring a commercial collection agency becomes a worthwhile expense.
2. Does the commercial collection agency follow the Fair Debt Collection Practices Act? The manner in which the debt is collected is viewed as an extension of your business.
3. Is the commercial collection agency capable of skip tracing? Skip tracing utilizes various databases to track down debtors who have moved away without leaving a forwarding address or a valid phone number.
4. Is the commercial collection agency licensed and insured? Make sure the agency is licensed for collection in the state(s) in which the debtors reside. Also make sure that the commerical collection agency has Errors and Omissions insurance. This protects the collection agency and your business in the event that a debtor sues over the collection tactics used.
5. What are the fees and the success rate of the commercial collection agency? Is there a set fee or do they operate on a contingency basis? Ask about their collection success rate.
Take the time to compare several commercial collection agencies to find the right match for your business.