| How To Select Commercial Collection Agencies |
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| Written by David P. Montana |
| Thursday, 09 July 2009 05:07 |
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Hiring commercial collection agencies is a must in the current economy, when the default option for a lot of clients seems to be to drag out the payment process for as long as they can. If you've done the basic research you'll know that commercial collection agencies are more cost-effective than doing collections in house because they usually cost nothing up front and retrieve more receivables in a shorter amount of time.
Hiring commercial collection agencies is a must in the current economy, when the default option for a lot of clients seems to be to drag out the payment process for as long as they can. If you've done the basic research you'll know that commercial collection agencies are more cost-effective than doing collections in house because they usually cost nothing up front and retrieve more receivables in a shorter amount of time. First of all, phone calls from commercial collection agencies are often enough to get a slow-paying client to send a check. Existing clients may take advantage of their good relationship with you and drag their feet as long as possible, hoping to trade on your goodwill. Calling in a professional debt collector shows them you mean business. Once you've found a list of potential commercial collection agencies, it's time to interview them regarding their success rate. It's best to pick an agency with a higher success rate, and ask for documentation to prove their claims. An agency that charges 40% of returns as a fee but has a 75% success rate is preferable to one that charges 30% and has a 50% success rate, for example. When you have a number of agencies who have acceptable fees and success rates, there are still other questions to ask. You want to pick commercial collection agencies that match your industry, for example. If your clients are all Fortune 500 companies, the debt collector that specializes in individual consumers is not going to be the right match for you. You need a debt collector whose strategies meet your needs. To this end, it helps to interview current clients of commercial collection agencies to find out how satisfied they are with the vendor's services. If the agency can point you to clients who have used their services for years it's a very good sign, especially if they're in industries that are aligned with yours. Commercial collection agencies are experts at recovering receivables quickly. Studies have shown that once the collections process starts in earnest, people who are going to pay are most likely to pay within the first month. Having a persistent debt collector on the case greatly increases the chances of obtaining that money in the first month. When using an agency, there's no cost up front, and no cost at all if they are unsuccessful. Some commercial debt collectors boasting success rates of as high as 98%, even after paying their fee your return rate is likely to be much better than it would be if you did it on your own. With all these arguments in their favor, the question should not be whether or not to use commercial collection agencies, but how soon can you get started? Commercial collection agencies can significantly improve your chances of recovering bad debt at no upfront cost and little ultimate cost. For the small business owner who relies on positive cash flow, commercial debt collection can be a life saver. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. David P. Montana has been a noted industry expert, business consultant and writer in collection agencies services for thirty years. He offers more valuable tips and resources on commercial collection consultants and commercial collection agencies. |
| Last Updated on Thursday, 09 July 2009 05:08 |