Debt collectors are a great asset for any business in assisting their cash flow and ensuring customers stick to their obligations. Unless of course you have an abundance of cash in your bank account and all your customers pay you on time! Even if you do the debt recovery yourself at some stage in your business life, you will need a debt collector. Choosing the wrong debt collecting agency could cause you lots of frustrations and loss of time and income!
So where and how do you find a debt collection agency that you can trust and are professionals?
Here’s a Quick Checklist to help you.
Your needs/make a list: Establish the number of accounts you have that require collections and the approximate total dollar value. By doing this, you can be assured in receiving the best rates from your collection agency. Check if you have supporting documentation such as; signed authorities, signed delivery dockets or Director’s Guarantees. These documents are required to be given to the agency or should be asked of you upfront. Having this information
may save you time and money and in addition, Director’s Guarantees may provide you with a second chance in collecting your accounts.
Contact the agency: A phone call to a couple of agencies will establish some comparisons on services/fees/guarantees. Check how long the agency has been in the industry and if they specialise in certain industries. If they have a website you can research further information and check on any point of difference and benefits.
License required: All debt collectors are required to be licensed in their specific areas of their expertise. This is a great question to ask, after all it’s your money they are collecting. We would recommend you ask if the agency is a member of a recognised association such as; Institute of Mercantile Agents Ltd (IMA). It isn’t compulsory however it may give you a piece of mind. Should you have any concerns about the agency you can contact them about their member or perhaps they could put you in touch with a couple of agencies.
Services available: All agencies operate differently and offer different rates, cheapest isn’t always the best as they may have hidden charges and they may not be motivated to collect for you. A signed written agreement that clearly states their fees and penalties will save you some headaches! (For example if you have a change of mind and want the agency to stop collecting during the process, you may be charged commision). Having an agency that offers you a one stop shop would be preferable rather than looking for a Solicitor or locating an investigator to assist during collections.
Size: A larger agency may offer you good rates in comparison to a small to mid size business. However a smaller business would be more commited in providing you with a personalised service and giving you better results.
Questions to ask your Propective Debt Collector …
- How many people will look after my accounts?
- How do you report on the progress and how often?
- Is Commission charged on the debt value or payments received and how much?
- What other charges do I need to be aware of prior to commencing?