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Dealing With A Collection Agency
Step I - Selecting A Collection Agency
Selecting a credit collection agency is perhaps the most
important and difficult task. Some factors you must consider
while selecting a collection agency are:
- Experience and professionals
- Geographical presence
- Expertise
- Fees and charging model
- Customer references
- Collection Agency Services has covered this topic in depth
through various free collections reports and articles on this
site.
Step II - Hiring the Collection Agency and Setting Up
Processes
Once you select the collection agency, the first two steps you
have to take are:
Enter into a contract with the agency;
Set up processes on how you are going to communicate with the
agency.
A contract is the legal document and your legal experts will,
of course, prepare it correctly. Just make sure that you include
important clauses such as confidentiality and non-disclosure. You
are likely to pass sensitive information to the collection agency
such as your account receivables, customer contacts, product and
services pricing, etc. to facilitate faster debt collection. You
want to be sure that this information does not fall in the wrong
hands.
Setting up processes is a very important step in dealing with
the collection agency. The success or failure of your partnership
will depend a lot on how well-defined your processes are and how
strictly they are followed. Important processes you need to
define are:
Internal processes: You have to put in place a clear process
on defining bad debt and referring the case to the collection
agency. You don't want to refer the case to the collection agency
before you make a sincere effort to collect the dues
internally.
Information transfer: How will you transfer the information to
the collection agency about your dues and defaulting customers,
and how will you receive the information from your collection
agency? Debt collection software can make the information
transfer process easy and secured.
Third party dealing: As mentioned earlier, it is very
important for you to ensure the security of the information you
give to the collection agency. The collection agency may use one
or more of its associated agencies to get information about
defaulting customers. Hence you need to set up a clear protocol
on how much information they can share with such third
parties.
Communication: You need to set up single point contacts for
communication within the company and the collection agency. In
debt collection practices, the timing of communication is
extremely important and hence it will go a long way in deciding
the success of your debt collection process. Again, the
importance of debt collection software cannot be overemphasized
here.
Step III - Performance Monitoring
Once all processes are set, start monitoring the performance
of the collection agency. This is an ongoing process when dealing
with a collection agency. Important parameters to monitor
are:
Quantitative
- Number of cases referred to the credit collection agency and
percentage of cases successfully solved by them.
- Percentage of debt recovered by the collection agency from
all cases referred.
- Percentage of debt recovered by the collection agency from
solved cases.
- Percentage of amount paid as fees/commission to the
collection agency to the total bad debt cases referred to
them.
- Average number of days taken by the collection agency for
full/partial credit collection.
Qualitative
* How well do the collection agency professionals deal with
your customers?
* Has the collection agency followed all legal requirements
mentioned in the Fair Debt Collection Practices Act?
* Has the collection agency gone beyond the provisions of the
Fair Debt Collection Practices Act?
* Has the collection agency followed all processes and
guidelines set by you?
Step IV - Contract Closure
Hopefully, the selected collection agency will work best for
you. But if it doesn't, then you need to transfer all your debt
collection processes from the agency. You should remember the
following important points when you are ending the contract:
Confidentiality and non-disclosure clauses are applicable even
after the end of the contract with the collection agency as well
as its employees. The collection agency returns all documents
related to your business and destroys all information related to
your business from their data storage.
Following these simple guidelines will ensure that when
dealing with a collection agency that it works best for you and
your bad debts are minimized.
Collection Agency Services offers you a wealth of information
on how to select the best collection agency
for your business.
http://www.collectionagencyservices.net
MORE RESOURCES:
Clock ticks down on credit bureau class-action dealIndianapolis Star, United States - 57 minutes agoIn a class-action settlement, credit bureau TransUnion has agreed to provide free credit- monitoring services to millions of consumers to settle claims it ... |
MORE COLLEGE CREDITChicago Sun-Times, United States - 10 hours agoDespite the current nationwide credit crunch, the State of Illinois secured $100 million for the student loans by tapping a new source -- credit unions. ... |
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