If you own a small to mid-sized business, you have probably run into clients who just won’t pay invoices on time – or at all. So what do you do? It may be time to hire a collection agency. But what does a collection agency really do? Better yet, how do you go about finding and hiring the right one?
A collection agency is a company that will reach out to your clients with unpaid accounts. They may do this by letter, phone, or email. Sometimes, legal recourse may be necessary. An agency can handle this and is equipped to do so. The bottom line is they work on getting your money for you, for which you pay them a fee. Some work on contingency plans, some for a fixed amount, and some on a combination thereof. So when your customer is not following through with their promised payment, it may be time to enlist a collection agency for help.
5 Tips for Hiring a Collection Agency
According to Business News Daily, there are over 4,000 collection agencies in the United States. Some specialize in specific fields of business or certain size companies. Some have great reputations and track records, some not so much. It’s important to find the best one for your company.
1. Hire a company with a strong track record. You need to know that the company you select has a record of successfully recovering debts. You also want to agree with the tactics they use and know that they will collect the money owed to your business.
2. Find a company that will tailor your plan to your particular situation. Rocket Receivables is a company with solutions designed with our customers in mind to recover their outstanding AR quickly.
3. Find a company that fits your size. If you are a small to mid-sized company, go with a company that has experience working with your type of business. Focus on hiring a collection partner that will work closely and personally with your business, fitting a personalized plan to get your money.
4. Make sure the company is licensed, bonded and insured. If they are in your state, make sure their license is good for your state. The same goes for out of state; they have to be bonded/licensed in your state and theirs.
5. Agree with the methods they use. Companies like Rocket Receivables (request info) have clear plans and methods to conduct debt collection. They use honest, ethical methods to be successful in their field. You want a company of high standards of which you are proud to work, not resorting illegal, unethical, or harassing strategies.
Sometimes it’s best to let experts handle select process within your business, which allows you to focus on what you do best – run your business. If you are having concerns with debt collection, it’s a good idea to hire a collection agency. Just make sure it’s the right one.