5 Factors to Consider Before Hiring a Debt Collection Agency

One of the ways that businesses lose money is in the form of bad debts. When you have too many delinquent accounts, you can find yourself cash flow strapped and unable to run your business efficiently. Collecting on those accounts can be time consuming and use up your resources. One of the best things to do in such scenarios is to hire a collection agency to do the work for you.

Once you come to that decision, then it is time to choose which debt collection agency you will work with. Unfortunately, not all of them can do a great job for you or are a perfect fit for your business.  When making that selection, you need to begin by looking at the following factors:

1. Find out how long they have been in operation – You want to find a business that has experience and many times, the longer they have been around, the more experience they have. It is a good idea to go through their website with a fine tooth comb, call them up and find out how long they have been doing this and if they have tackled challenges similar to yours.
2. Make sure they are reputable – You can see how credible they are by looking at reviews and testimonials about the company. You do not want to be working with an agency that has shady practices.  Reputable companies will be open with information and will let you know who is in charge of your collections.  Inkasso.is is a good example of what you should be looking for.
3. Charges – You want to make sure you understand how they charge and who pays for the service. Many times a commission is charged and should be balanced with their success rate.  If you will be hiring them for the long term, then review how efficiency will be improved as costs for debt collection go down. Be keen to look for any hidden fees and review the SLA keenly prior to signing up.
4. Consider their recovery rate – You want to find out how well they have done in your particular field. Ensure that you have a clear understanding of their recovery rates and percentages.  Your goal is to find out what the net return is and not just the commission rate. If you have very specific debts to be collected, find out how successful they have been with such recoveries.
5. Ask if they can show you their client list – If they are willing to do so, give these clients a call and ask what they think of the collection agency’s services. If they will not give you the full list, they may be willing to give you some referrals that you can call. The goal is to find out more about the agency’s success rate and if there have been any problems between them and their clients. Reading online reviews will also give you a good feel of how the company does.

Now that you know what to look for in finding a good agency to work with, you can make a great choice and be on your way to recovering money owed by defaulters.