How do I choose a good collection agency?

Top 10 ways to choose a good collection agency

Choosing a collection agency is a very important decision and one that must be made with careful planning. Here are 10 things you should consider when choosing a collection agency

1. Does the collection agency have licenses in the states your debtors reside? Each state has different rules about licensing collection agencies. Make sure that the agencies you consider have the proper licensing for the location you are in.
2. Check out the form letters your clients will be sent. Make sure you are comfortable with the wording and that it works for the type of accounts you are wanting collected. Make sure the letter reflects the urgency yet professional attitude you want to portray without offending your clients.
3. Check out the training the phone representatives receive to prepare them to call your clients. Make sure you are comfortable with their phone manners and voice. If they have a computer caller see what that message says and if you are comfortable with the impersonal fee of the computer calling your customers to ask for payment.
4. Cost is important but must be weighed against the percentage collected. If you have two companies who charge the same contingency fee of 25% but one collects an average of 70% of their debts and the other collects only 50% then you will actually pay more to the first but collect more as well so it is not an "apples to apples" comparison as it would seem on the surface.
5. Does the collection agency have experience in your type of accounts? For instance if you are a student loan business does the company have specialized training and experience with student loan collections? This can be a very important factor in choosing and must not be overlooked.
6. How does the agency handle skip tracking? Skip tracking is the name for finding debtors who have changed addresses and phone numbers. A good agency has online search capabilities and telephone databases in place to help track these lost debtors down.
7. Insurance- A good agency has an Errors and Omissions Liability insurance policy this protects both of you should your client file harassment charges against you or the agency for your collection efforts. More courts are finding the companies that retain agencies doing illegal collection activities guilty as well as the agency so if an agency says they will "guarantee" successful collection . . run the other way!
8. It is illegal under the FDCPA to send the same account to different agencies? But it is good business to send different accounts to different agencies to see which performs the best for you. This is a great way to try out the services and performance of each agency before you settle down with just one.
9. Make sure you get references for the agency and check if they have any unresolved complaints. Also ask for the typical success rate they have with the accounts that the agency handles for them. Word of mouth is the best way to find a great agency. Especially check with companies like yours who they go through because that means they have experience with your type of debtor.

Make sure your agency is a member of a respected association. One national association that provides training and standards for the collection industry is the Consumer Data Industry Association (CDIA). Members must meet and maintain certain high standards to be admitted.

Hiring a Collection agency is a big decision and must be made with care. These 10 things will help you choose a good collection agency for your business needs.