Hiring commercial collection agencies is a must in the current economy, when the default option for a lot of clients seems to be to drag out the payment process for as long as they can. If you’ve done the basic research you’ll know that commercial collection agencies are more cost-effective than doing collections in house because they usually cost nothing up front and retrieve more receivables in a shorter amount of time.
Commercial collection agencies handle the collections process quickly, effectively and professionally, freeing your employees up for business-growing tasks. Think about it-you would not ask your accountant to handle your company’s advertising, would you? So why should you require her or your salespeople to handle collections?
Once you’ve found a list of potential commercial collection agencies, it’s time to interview them regarding their success rate. It’s best to pick an agency with a higher success rate, and ask for documentation to prove their claims. An agency that charges 40% of returns as a fee but has a 75% success rate is preferable to one that charges 30% and has a 50% success rate, for example.
Commercial collection agencies are also cognizant of the laws governing debt collection and will keep their behavior within the bounds of what is allowed. Using methods that are against the law can cause you to be fined and will jeopardize your collection efforts. While this may be a remote possibility, it’s far better to have a professional handle the job rather than risk losing everything due to an amateurish mistake.
You may have been hesitant to hire commercial collection agencies in the past due to the mistaken impression that it costs a lot, but most debt collectors take their fee as a percentage of the recovery. That means there’s no cost to you up front, and since commercial collection agencies have been proven to be much more effective than phone calls from in-house people, the recovery itself is likely to be much larger. For this reason, you’ll make more money in the long run by hiring a debt collector, even after you pay their fee.
Commercial collection agencies are experts at recovering receivables quickly. Studies have shown that once the collections process starts in earnest, people who are going to pay are most likely to pay within the first month. Having a persistent debt collector on the case greatly increases the chances of obtaining that money in the first month.
Another reason to choose a particular company among commercial collection agencies are value-added services. For example, skip traces, a service normally done by detective agencies in which they locate people who are trying to obscure their address, are also done by some collections agencies.
Commercial collection agencies know how to get the evasive person on the phone and get them to commit verbally to making a payment. Once clients have made a promise to pay they are a lot more likely to follow through on it. Using commercial collection agencies is simply a superior way to handle slow payers for any business.
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Tags: accounts receivable, business, collection agency, consulting, Credit, debt collection, debt management, Finance, profit recovery