Making Sure Your Business Collects When Times Are Tough
For those companies who are having trouble collecting payments from clients, the option often turns to hiring a collection agency. But how do you go about hiring the right agency, an agency that will in turn have your best interests at heart?
The simple goal of a collection agency is to locate the debtor and acquire the payment while abiding by the Fair Debt Collection Practices Act. In return for the service, the business compensates the agency for recovering the payment, with the quicker the action the better chance of receiving a payment from the debtor.
In the event your small business is in need of debt collection, there are several keys to follow:
- Look for a collection agency that has a focus on small businesses, along with one that has a track record of success. Getting referrals from similar businesses who have used such agencies never hurts;
- Look for a number of quotes before you settle on an agency, as fees can differ to a great degree. That being said, don’t take the cheapest quote just to save money, as you may end up with less than stellar service;
- Look for an agency that has a good reputation and not one known for harassing consumers. As it stands, federal rules regarding obtaining money from consumers has been tightened in recent years. You do not want to work with an agency that has run afoul of the rules and regulations and could drag you into a court mess. Be sure the agency meets all state licensing and/or bonding requirements.
In the event you’re wavering on whether or not you need a collection agency, determine if you have done all you could to obtain a payment from a customer.
Among the things to review are:
- Have we sent the correct amount of statements and reminders to the customer to handle the matter?
- Have we returned any phone calls or correspondence the customer initiated?
- Have we had an issue with this customer in the past? If not, why may it be happening now? If so, what was done to rectify the issue before?
- Have we thought about what might happen to the current business we have with a customer if a collection agency gets involved? Perhaps we will lose that customer and his or her business for good?
Over time, your company cannot afford to have customers skipping out on their bills, due to the simple fact that your bottom line revenue is seriously impacted. By using a qualified and trusted debt collection service, you remove the burden of having to go after customers for payment, leaving it in the hands of the professionals.
When doing so, however, be sure to take your time and find the right agency that will make it its business to work for you, not the other way around.
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