At FIRMS we realize that some of our potential clients have never worked with a debt collection company before. We have found a very insightful and helpful article written by Credit.com that will help guide you through the process and some tips to consider when making your choice.
When to hire a collection agency
Most companies send accounts to a collection agency when they are between 90 and 120 days past due. If you wait longer than that, you’re far less likely to recover the debt. The more time that passes, the lower the chances. Generally, it’s time to start thinking about hiring a collection agency if:
- New customers do not respond to your first attempt to collect the debt. When you do not have a history of transactions with the customer, there’s a greater chance they will refuse to pay or never intended to.
- You’ve agreed to a payment plan, but the customer does not follow through. Customers who still won’t pay after you’ve agreed to meet them halfway with a payment plan are unlikely to change their minds.
- A customer completely denies responsibility for the debt. Without a collection agency, these debts are rarely recovered.
- The customer makes unfounded complaints about your business, product or service as an excuse not to pay. Most of the time, these complaints are just an excuse to get out of paying the debt.
- The customer is going through a serious personal situation such as a divorce. Often, one spouse blames the other for the debt. A collection agency will be able to get to the bottom of who’s responsible.
- The customer has a long history of being financially irresponsible.
Deciding when to hire a collection agency is a personal choice, of course. But once it becomes clear you’ve exhausted all your options and aren’t getting anywhere, the debt is better left in the hands of a professional agency. It is better to recover some portion of the debt than none of it.
Choosing a collection agency
There are more than 5,000 collection agencies in the United States alone, and not all are alike — far from it, in fact. Some handle consumer accounts, while others specialize in business-to-business (B2B) collections. The biggest firms often handle both. Some collection agencies specialize in certain industries such as medical, insurance, utilities, credit cards, mortgages or auto loans, while others work for a number of industries. There are agencies that cater specifically to small businesses and those that cater to large corporations. Some agencies are local or statewide in focus, while others are national firms.
Generally, it is important to hire a collection agency that has an established track record of successful collections in your industry. The agency needs to be familiar with the terminology in your industry, and the rules or regulations set forth by state or federal agencies governing your industry, if applicable. If you’re in the medical field, for example, the agency needs to be well versed in insurance requirements and medical terms. If you have consumer debt, find an agency that specializes in consumer debt.
It is always important to focus and choose a debt collection company that will work best with your company. And guess what? FIRMS is that debt collection company that will work best with you!
We hope to hear from you soon!