I once hired a man to fix a (not-quite-existent) leak in my shower (turns out it was the shower pan and not the pipes, but this took approximately 127 years to figure out for reasons that are beyond me) based solely on my friend Debra’s suggestion.
He arrived late, had a long and whispered mobile phone conversation with someone in the closet of the guest bedroom (that’s fancy talk for “tiny room on the second floor that increased the price of our house by 200% when we bought it, but is now a liability for when we want to sell it”), maybe did something to our cat, and then said “All fixed!” without my ever hearing him use a tool. This cost us $125 ++
I mention all of this because, had I done a little more research into plumbers, and had I remembered that my friend Debra meets a lot of people on the bus (like, a lot a lot), maybe I wouldn’t have hired that guy sight-unseen. This is the point about things to keep in mind when hiring professionals in the first place.
Hiring a debt collector is essentially bringing on a business partner — someone who is representing your company on your behalf, but not necessarily in your offices. And that’s where it can get a little dicey. You want to make sure you’re bringing on a company who has your best interest in mind:
“Your cash flow is at stake. You have legitimate receivables to collect. A professional debt collection agency is trained to do it properly. [But] how can you find a collection agency, and more importantly, how do you identify the best service provider as opposed to just the best, or most aggressive, or only marketer?”
Selecting a debt collection agency can be a daunting task. They range from individuals to large corporations with over 1,000 employees. You hear lots of negative things about the collection of debt in the news and certainly don’t want to be on the wrong end of one of those reports, nationally or even locally.
Yet your cash flow is at stake. You have legitimate receivables to collect, and a professional debt collection agency is trained to do it properly. How can you find a collection agency, and more importantly, how do you identify the best service provider as opposed to just the best, or most aggressive, or only marketer?
Your collection agency should represent your organisation in a responsible and professional manner, and provide a satisfactory rate of recovery while maintaining your public image. As with any service, you’d like to get the highest return for the lowest cost possible. However, in the case of debt collection, this decision involves more than just giving your business to the lowest bidder – it requires careful consideration. “You get what you pay for” is often overlooked when hiring collectors and this can lead to lackluster results (best case) or significant damage to reputation (worst case).
There are many criteria to consider. For very large creditors, like major banks, credit card companies or utilities, the process can (and should) be extensive. For the majority of businesses or organisations, here is a compiled list of the most important criteria.
Your selected agency should be:
- Fully licensed (each state has its own laws about this), bonded and insured. You may be surprised by the number of unlicensed Agencies out there.
- Experienced in your specific industry, such as hospitals, physicians’ offices, dental practices, utilities, municipal governments, student loans, or commercial/B2Bs.
- Experienced in the type/age of debt you need collected (15 days past due is a different animal than 180 days past due), as well as the average balance size.
- Willing to provide detailed information on the collections process. For instance, exactly how will your customers be contacted, how often, and in what manner?
- Have a trust account for payments from your customers to prevent co-mingling of your funds with others.
- Easy to communicate with, including providing you with a clear fee schedule, an accessible single point of contact, a reliable, simple method of transmitting files electronically, and a plain English agreement that explains all terms clearly, including how and when you will be paid.
- Prepared to provide regular reports on their activity.
- Willing to engage in a detailed discussion of their training program.
- A low-risk provider.
Another important matter to consider with the larger Agencies who are listed on the ASX is: Is your Debt Collector working for you or the Shareholder? Quite often in larger Agencies debt collection is a numbers game and their best interests doesn’t include their Client. Matters will be settled quickly or written off early to enable them to move on to the next debt.
Paramount Collections are tenacious in our pursuit of your money.
We are a small business with big business capabilities.