Many small to medium-sized businesses consider hiring a collection agency to help with their receivables. One big question you may find yourself asking though, is the cost worth it? You may also wonder what the agency can do for you that you can’t do yourself. Let’s take a look at these questions.
Why hire a debt collector?
Before thinking about the cost, it’s important to think about the reason to hire a debt collection agency. The longer a debt goes unpaid, the less the chances of recovery become. Debt collectors collect a debt. Just as you are expert in your field, they are experts at collecting unpaid debt.
By hiring a collection agency, you can focus on your business and let the agency focus on your unpaid accounts. Collection agencies are skilled at streamlining the whole process and have access to data software, databases, and phone systems to track what they are doing. Federal laws are in place regarding contacting people about debt collection, and the agencies are familiar with these ever-changing rules and regulations. You may run the risk of infractions with these laws.
It’s important to ask some questions to prospective collection companies, like what is their recovery rate? You may also want to ask what compliance and data security measures they take to ensure your customer’s data stays safe and you stay compliant.
How much will it cost you?
Just like any field, debt collection services vary in size and what their focus is. While some agencies may focus on specific industries, some focus on business size and others are just more general. And with this variety, cost structures will vary, too.
While some agencies work with a fixed fee that you pay them, other collection companies work on a percentage once the debt is collected. Some do a combination of both. For instance, Rocket Receivables has a two-part structure where Stage One has a low cost fixed fee. Depending on the number of delinquent accounts you want to be recovered, your fixed fee will be set. This is a nice structure because there are no cost surprises. View the pricing for Stage One here.
What are contingency collections?
Another type of payment structure is contingency collections. This is where you only pay once the debt is collected. Usually, this is reserved for long delinquent debts that are proving to be difficult accounts. The fee is higher and is a percentage of the debt collected. However, if there has been no luck collecting this debt already, the higher fee is worth it. Again, a great example is Rocket Receivables. This is Stage Two of our price structure. Once we collect this debt for you, we will earn a predetermined percentage of the amount recovered.
What can they do?
Because debt collection agencies specialize in this field and have the tools and skills to do so effectively, we let you carry on your business while we secure your money. The bottom line is that we are skilled at collecting unpaid debt. You pay for a set plan. The key is to find an agency that not only will work well for you but that will work effectively with you. One with different options, like Rocket Receivables, is a smart choice. Buy now to take advantage of our revolutionary two-stage collection process.