Collections are not easy, especially when a lot of money is at stake. The more the amount of money your client owes you, the more imperative it is for you to be able to employ all possible means to recover your dues. Once all sources of collecting dues have been exhausted, you need to hire a debt collections agency to do your bidding.
A well placed collections agency can not only recover your dues, but also help you make your business more efficient in the long run. Such agencies, when employed, act as your back up plan, thereby giving you reassurance that your money will be recovered in one way or the other. For this very reason, it becomes very important to take the necessary steps to hire the right collections agency.
Here are some steps you can keep in mind to hire the right collections agency for your business:
• Choosing between consumer and commercial collections agency: Depending upon the type of customers you deal with on a day to day basis, you need to hire the right agency. There are different types of agencies which deal with individual collections and corporate collections. If your business is dealing with companies on a day to day basis, you should be hiring a commercial agency and vice versa. Ideally, it’s advisable to not mix the different agencies, to avoid incomplete collections.
• Is the agency recognized by a statute body? If you are going to be hiring a third party collections agency, you would want to be on the right side of the law. Collections are a tricky business; if you don’t take the required precautions, you might end up getting sued by your clients you are collecting from.
• Type of collections process: There are different ways to approach collections. Many collection agencies are extremely rigid in their approaches while many others are willing to change the tactics for some customers. However, one collection methodology might work for one type of business but might not work for another business vertical. In such cases, you need to figure out the collection strategies with your agency to try and understand if the methodologies will suit your business type.
• What is the turnaround time for the agency? You are hiring an agency to collect money on your behalf. Since time is of the essence, it’s important to take into consideration the turnaround time for collecting debt. The more the agency collects, the more recovery you can show in your book of accounts. This way, not only does your business prosper, but you also have enough funds to employ back into your business.
• What are the agency charges? Since the agency will be charging you a fee for their collection services, you need to be on top of the charges. If the agency is taking a hefty fee for their services, you might want to look for alternate options for your debt collection. However, if the fee percentage is reasonable, only then it would make sense to go ahead and hire the agency.
While this is not an exhaustive list of the things to be kept in mind, it’s definitely some of the top points you need to consider during the hiring process.