Choosing a credit collection agency is maybe the most important and challenging task. Some elements you must consider while choosing a debt collection agency are:
- Experience and specialists
- Geographical existence
- Expertise
- Fees and charging model
- Client references
- Collection Agency Services has covered this topic in depth through different complimentary collections reports and articles on this site.
Step II - Hiring the Debt Collection Agency and Setting Up Procedures
When you choose the debt collector, the very first 2 actions you need to take are:
Participate in 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, obviously, prepare it correctly. Simply ensure that you consist of crucial stipulations 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 details does not fall in the incorrect hands.
Establishing procedures is a very important step in dealing with the collection agency. The success or failure of your partnership will depend a lot on how distinct your processes are and how strictly they are followed. Crucial procedures you have to define are:
Internal processes: You have to put in place a clear procedure on specifying uncollectable bill and referring the case to the debt collection agency. You don't want to refer the case to the collection agency before you make a genuine effort to gather the fees internally.
Info transfer: How will you transfer the information to the debt collector about your charges and defaulting clients, and how will you receive the information from your debt collector? Debt collection software application can make the info transfer process easy and protected.
3rd party dealing: As discussed earlier, it is crucial for you to make sure the security of Zenith Financial Network the info you offer to the collection agency. The debt collector might use one or more of its involved companies to get information about defaulting consumers. Thus you need to establish a clear procedure on just how much information they can show such third parties.
Interaction: You need to establish single point contacts for interaction within the company and the collection agency. In debt collection practices, the timing of interaction is incredibly important and for this reason it will go a long way in choosing the success of your debt collection procedure. Again, the value of debt collection software can not be overemphasized here.
Action III - Performance Monitoring
As soon as all processes are set, start keeping an eye on the performance of the collection agency. When dealing with a collection agency, this is an ongoing process. Essential specifications to keep an eye on are:
Quantitative
- Variety of cases referred to the credit debt collector and percentage of cases successfully fixed by them.
- Percentage of debt recuperated by the debt collection agency from all cases referred.
- Percentage of debt recuperated by the collection agency from fixed cases.
- Percentage of quantity paid as fees/commission to the collection agency to the total bad debt cases described them.
- Average variety of days taken by the debt collection agency for full/partial credit collection.
Qualitative
* How well do the collection agency experts deal with your consumers?
* Has the debt collection agency followed all legal requirements pointed out in the Fair Debt Collection Practices Act?
* Has the debt collection agency surpassed the provisions of the Fair Debt Collection Practices Act?
* Has the debt collector followed all processes and standards set by you?
Step IV - Agreement Closure
Hopefully, the chosen debt collector will work best for you. If it does not, then you need to transfer all your debt collection procedures from the agency. You need to remember the following crucial points when you are ending the contract:
Privacy and non-disclosure clauses are applicable after the end of the agreement with the debt collector in addition to its staff members. The collection agency returns all files related to your service and damages all information related to your service from their information storage.
You are likely to pass delicate info to the collection agency such as your account receivables, consumer contacts, item and services rates, and so on to facilitate faster debt collection. Setting up processes is a very important step in dealing with the collection agency. The collection agency might utilize one or more of its associated companies to get info about defaulting customers. In debt collection practices, the timing of communication is exceptionally important and thus it will go a long method in choosing the success of your debt collection procedure. If it doesn't, then you need to move all your debt collection procedures from the agency.
