As a business owner, one of the most frustrating experiences is having to deal with past-due accounts and unpaid debts. That’s where collection agencies come in – they specialize in helping businesses recover their unpaid debts. However, it’s important to choose the right debt collection agency to ensure that your accounts are handled professionally and legally. To help you make an informed decision, here are 10 critical questions to ask before hiring a debt collection agency.
What is your success rate in collecting debt?
The success rate of a collection agency is a critical factor to consider. You want to work with a company that has a proven track record of successfully collecting a debt. Ask the agency for their current success rate, as well as for examples of similar accounts they have successfully collected in the past.
What is your fee structure, and how do you determine the amount you charge?
Collection agencies typically charge a percentage of the total debt collected, which is known as a contingency fee. Some may also charge an upfront fee. Be sure to ask about their fee structure and how they determine their fees. This will help you avoid any surprise costs down the road.
How do you communicate with debtors, and what methods do you use to collect payment?
It’s important to know how the collection agency communicates with debtors and what methods they use to collect payment. Some agencies may use aggressive or even illegal tactics, which could harm your business’s reputation. Make sure the agency you choose uses ethical and professional communication methods that comply with the Fair Debt Collection Practices Act (FDCPA).
Do you comply with the Fair Debt Collection Practices Act (FDCPA) and other industry regulations?
The FDCPA sets strict guidelines for how collection agencies can communicate with debtors and collect payment. Make sure the collection agency you choose complies with the FDCPA and other industry regulations to avoid any legal issues down the road.
How do you handle disputes or objections from debtors?
Disputes and objections from debtors are a common occurrence in the collections process. It’s important to know how the collection agency will handle these situations, and if they have a fair and transparent process in place.
Does the debt collection agency have experience in my industry or a similar industry?
Collection agencies may specialize in certain industries, so it’s important to choose an agency that has experience collecting debt in your industry or a similar one. This experience can help the agency understand the unique challenges and requirements of your business.
How does the debt collection agency prioritize and manage multiple accounts for a single client?
If your business has multiple past-due accounts, it’s important to choose a collection agency that can prioritize and manage them effectively. Ask the agency how they prioritize accounts and how they will keep you informed on the status of each account.
Can you provide references from current or past clients?
Asking the collection agency for references from current or past clients will give you an idea of the agency’s performance, reputation, and overall professionalism.
How do you report back to your clients on the status of their accounts?
It’s important to know how the collection agency will communicate with you about the status of your accounts. Ask the agency how often they will provide updates, what information they will provide, and how they will deliver the updates.
Can you customize your services to meet the specific needs of my business?
Every business is unique, therefore your collection needs may differ from those of other businesses. Ask the collection agency if they can customize their services to meet the specific needs of your business, such as custom reporting or specialized debt.