Five Tips for Hiring a Debt Recovery or Debt Collection Agency

Contemplating whether to hire a debt collection agency for your business? Are your customers driving you into a debt ditch, with their overdue payments? If you have exhausted all possible sources of recovery by now, you must be considering hiring a debt collection agency for your business. The higher the debt you end up with, the more important a debt collection agency becomes for your business.

Given the importance of debt recovery agencies, it is necessary to ensure you take the right steps to hire a good debt recovery agency. By following these 5 steps, you can hire the perfect agency, which will help you collect all your pending dues, without having you worry about your recovery strategies.

1. Research is the key:
The more you research, the higher the chances of landing yourself a good collection agency. Different agencies specialise in different collection procedures; some might be excelling in securing funds from exponentially large organisations, while others might be collecting money from individuals and small businesses. Depending on the kind of customer base you have, you need to ask around for the right agency to help you recover your pending debt.

2. Strategy plays an important role:
You can’t negate the importance of a good collection plan. Since every business has a different customer base, there are different strategies needed for collecting money. While one strategy might do wonders for one type of business, it might completely backfire for another business. Keeping this reason in mind, a good agency will always be flexible enough to understand the customer’s needs before recreating the recovery strategies needed.

3. Fee’ it up: Different agencies charge differently;
while some agencies might be charging a minimal amount for their services, many others might charge more than the normal going rate. At the end of the day, the fee is their way to earn from the customers’. The idea is to gauge your needs and your bandwidth when it comes to shelling out the required fee amount. If you are satisfied with the track record of the agency in question, you can try negotiating with them for the fee charged.

4. Skip Tracking tactics:
When customers’ are faced with debt collection notices, they tend to make a run for it. Even though this is not a legal practice, it does not mean that people will not do it. In order to combat the situation, many collection agencies use a procedure also known as ‘skip tracing’. Through this process, agencies make use of different databases to locate the errant debtor, so that they can make them pay the pending dues. A good agency should always posses the right tactics to trace such customers and recover their client’s dues.

5. Progress updates are important:
When you are getting work done from an external agency, the idea is to always be in the loop. Since you are dealing with customers, it’s important to be updated at all given times. The frequency should be mutually decided at the time of initiation, in order to help figure out the change of plans, if needed. The higher the frequency, the more well planned and detailed a business’s approach would be to combat the problem of debtors.

Hiring a Collection Agency for Unpaid Invoices

Handling unpaid debt is really an option not many people can afford. You send out an invoice to your customer, but the customer does not pay it. You wait for a few days, send reminders, and still you don’t get the dues cleared. One way is to get frustrated; the other way is to take the legal route and send a demand letter, before going ahead and taking extreme measures.


Demand letter all the way

A demand letter is custom made for customers’ who refuse to clear their pending dues. Ideally, a demand letter is a legal notification drafted by the attorney of the company, which demands a customer to clear what they owe to the issuer of the demand letter. However, the question to ask is, “Does a demand letter work with stubborn customers also?”

Ask a lawyer this question and the standard answer one would get is, “It depends”. It won’t be wrong to say that demand letters will also work in some situations and they won’t work in others. In a normal scenario, most attorneys tend to ignore demand letters from opposing counsels; on the other hand, there is always a possibility that your request for repayment might not fall on deaf ears and you just might get what is due to you.

While some people want to send multiple letters to the debtors, many others prefer to go ahead and hire a collection agency to do their bidding. By hiring a collection agency, they are able to assimilate a ray of hope for recovering what is due to them.

Hiring a collection agency:

A collection agency is a third party company, which uses different methodologies to help another company/individual recover their pending dues. However, before hiring an agency, it’s imperative to have exhausted all possible sources of recovery. Once you are sure there is no other trick in the book left with you, you should go ahead and hire an agency.


Now the main part comes into the picture. How do you hire an agency? In an ideal situation, you need to hire an agency, in pretty much the same way as you would hire a lawyer. You ask around, check with family and friends, gather opinions and read reviews before taking the final call. Once you have narrowed down on the agency which caters to your needs, you are ready to take the plunge.


Winning the judgment on your terms

In normal circumstances, you need to consult your attorney and be ready for negotiations when the time for settlement comes. In the scenario that your negotiation attempts fail, you should initiate arbitration. Even if that does not get you the desired results, only then you should consult and hand over your pending debt to a collection agency. However, before you do step over to a collection agency, you should keep one thing in mind; there is no guarantee to get a full recovery on the pending debt, which might act as a spirit dampener in the end.