Collection Agency Articles
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Maximizing Your Debt Collection
The benefits of collection agencies are:
It creates a third party buffer between you and your customer, preventing charged up emotions from damaging your business relationship. Your time can be spent on income-generating tasks because your collections are being handled by the collection agency. This allows you to focus on growing your business and servicing your clients while the collection agency deals with your debtors and maximizes your debt collection. Debt collectors also have specific experience in dealing with non-paying customers. This allows the to be objective and level headed in dealing with your debtors because they are emotionally detached from the customer.
Frequently Asked Questions
“How do debt collection agencies collect debts?”
Initial collection action could include letters, phone calls and/or personal visits followed by possible private investigation, address monitoring/default listing and court action.
“How long should I wait before sending an account to a collection agency?”
You have already lost cash flow when an account remains unpaid. You are not a bank or a charity, so don’t allow your business to bankroll others. The quicker you instigate collection action, the better your chances of recovery success. In most cases, 90 days is the longest a business or practice should wait.
“What should I expect from my collection agency?”
- Your collection agency should abide both state and federal collection laws, Like the Fair Debt Collection Practices Act, and privacy laws such as HIPAA.
- You should expect your collections agency to update you regularly on developments and produce up to the minute reporting.
- Your collection agency should be willing to help you understand and implement best practice to maximize your collection rate.
- Your debt collection agency should pursue all the debts assigned with the same intensity. Most collection agencies have a habit of pursuing larger balances with more effort, leaving smaller balances to sit uncollected.
- Your collection agency should have an open line of communication with you - that is they should be happy to hear from you if you have any questions.
Your In-House Procedures
The secret to maximizing your debt collection is to set a firm policy on overdue accounts, and stick to it. A good start is to send statements each month, with reminder letters and phone calls. If the account passes past 90 days overdue - this is the time to use the collection agency. For more specific suggestions on maximizing your in-house debt collection, click on the following link:
Increasing In-House Collections
If your customers are made aware of your terms and conditions and credit policies and see you implementing and enforcing them, chances are most will ensure their accounts are paid on time. For the ones that don't - that is why there is a multi-billion dollar collections industry.
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