What to Look For in a Collection Agency

  • How Big are They? - There are 1000's of collection agencies in the US. Most are small operations, usually one or two people that may or may not have a license to collect in your state. When choosing a collection agency you should know whether it is one or two person operation, or is it a substantial organization that can bring more resources to bear in recovering your money.
  • Where can they Collect? - If you have customers in several states, make sure your collection agency is authorized to collect anywhere your customer are located.
  • What Kind of Reporting Can You Expect? - Make sure the collection agency will provide accurate reporting on a regular basis. Before signing on the dotted line, ask to see examples of the reports they provide and how often they are provided. Be wary of small collection agencies that may not have the resources to communicate status to all their clients on a regular basis.
  • Are They Experienced in Your Industry? - Many businesses require special collection expertise and services. This is especially true in medical/dental/veterinary collections. Make sure your collection agency has experience in your industry, and ask for a sample list of their clients in your business.
  • Do They Treat All Balances Equally? - If your agency takes a percentage of collected funds, and you have small balances, don't count on your agency to make much of an effort to collect your money. It's just business. If you have a $200 receivable and they are taking 25%, how much effort do you think they'll put in to collect your money and make $50 when they have larger "fish to fry".
  • Do They Comply with Regulations? - If your collection agency doesn't comply with all Federal, State and Local laws and regulations regarding debt collections, you can be exposed to legal action and severe penalties. Make sure your collection agency complies at the very least with federal regulations like FDCPA, HIPAA, and TCPA. They should also have the resources to ensure continued compliance in the face of changing regulatory environments. 
  • What Paperwork do You Have to Submit? - Make sure your collection agency has an efficient way to submit debtors. Filling out forms and faxing or mailing to the agency forces you to spend a lot of time preparing materials. Submitting by website is the most efficient way to submit debtors to an agency.
  • What Kind of Support Can You Expect? - Make sure your collection agency has the staff necessary to support you in a timely manner. Do they have a support phone number or email? How many people are dedicated to customer support? 
  • Will They Indemnify You Against Lawsuits? - Unfortunately, practices of some unscrupulous collection agencies can expose you to legal action from debtors or Federal, State and Local authorities. Will your collection agency protect you?
Finally, read and understand the contract you sign, and don't be afraid to ask questions.
The last thing you need is surprises down the road. 

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