Dealing With A Collection Agency

Step I - Selecting A Collection Agency

Selecting a credit collection agency is perhaps the most important and difficult task. Some factors you must consider while selecting a collection agency are:

- Experience and professionals
- Geographical presence
- Expertise
- Fees and charging model
- Customer references
- Collection Agency Services has covered this topic in depth through various free collections reports and articles on this site.

Step II - Hiring the Collection Agency and Setting Up Processes

Once you select the collection agency, the first two steps you have to take are:

Enter into 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, of course, prepare it correctly. Just make sure that you include important clauses 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 information does not fall in the wrong hands.

Setting up processes is a very important step in dealing with the collection agency. The success or failure of your partnership will depend a lot on how well-defined your processes are and how strictly they are followed. Important processes you need to define are:

Internal processes: You have to put in place a clear process on defining bad debt and referring the case to the collection agency. You don't want to refer the case to the collection agency before you make a sincere effort to collect the dues internally.

Information transfer: How will you transfer the information to the collection agency about your dues and defaulting customers, and how will you receive the information from your collection agency? Debt collection software can make the information transfer process easy and secured.

Third party dealing: As mentioned earlier, it is very important for you to ensure the security of the information you give to the collection agency. The collection agency may use one or more of its associated agencies to get information about defaulting customers. Hence you need to set up a clear protocol on how much information they can share with such third parties.

Communication: You need to set up single point contacts for communication within the company and the collection agency. In debt collection practices, the timing of communication is extremely important and hence it will go a long way in deciding the success of your debt collection process. Again, the importance of debt collection software cannot be overemphasized here.

Step III - Performance Monitoring

Once all processes are set, start monitoring the performance of the collection agency. This is an ongoing process when dealing with a collection agency. Important parameters to monitor are:

Quantitative

- Number of cases referred to the credit collection agency and percentage of cases successfully solved by them.

- Percentage of debt recovered by the collection agency from all cases referred.

- Percentage of debt recovered by the collection agency from solved cases.

- Percentage of amount paid as fees/commission to the collection agency to the total bad debt cases referred to them.

- Average number of days taken by the collection agency for full/partial credit collection.

Qualitative

* How well do the collection agency professionals deal with your customers?

* Has the collection agency followed all legal requirements mentioned in the Fair Debt Collection Practices Act?

* Has the collection agency gone beyond the provisions of the Fair Debt Collection Practices Act?

* Has the collection agency followed all processes and guidelines set by you?

Step IV - Contract Closure

Hopefully, the selected collection agency will work best for you. But if it doesn't, then you need to transfer all your debt collection processes from the agency. You should remember the following important points when you are ending the contract:

Confidentiality and non-disclosure clauses are applicable even after the end of the contract with the collection agency as well as its employees. The collection agency returns all documents related to your business and destroys all information related to your business from their data storage.

Following these simple guidelines will ensure that when dealing with a collection agency that it works best for you and your bad debts are minimized.

Collection Agency Services offers you a wealth of information on how to select the best collection agency for your business.

http://www.collectionagencyservices.net

---

Dealing With and Repairing Bad Credit

Bad credit can be a burden for otherwise good credit.... Read More

Which Credit Card?

Bewildered by the sheer variety of debit cards and credit... Read More

Special Credit Information for Married Couples

If you are married, establish separate credit accounts.Try to finance... Read More

Sound Advice For First Time Credit Card Users

If you are just entering the world of credit cards,... Read More

Useful Tips on Using Credit Cards

Here are some useful tips on using credit cards. Whether... Read More

Small Business Credit Cards

So what do you look for when applying for a... Read More

Credit Cards Can Help You Get Out Of Debt

Your credit rating / credit score is based upon how... Read More

All About Balance Transfers

What is a balance transfer?A balance transfer can be explained... Read More

Credit Reports: Find out why you have been refused Credit.

You may already have 2 or more credit cards in... Read More

Why Credit Cards are a Bad Idea

Credit cards are just so convenient, aren't they? There's no... Read More

Credit Traps Snag Consumers

Nearly 20 years ago I worked for a small consumer... Read More

Stop Struggling Because Of Poor Credit And Improve Credit Rating Now

Did you apply for a personal loan only to be... Read More

Always Avoid Payment Holidays

Once you've been paying off a credit card for a... Read More

Stop Credit Card Offers

You can stop receiving credit card offers in the mail!... Read More

What You Need to Know About Credit Reports

You hear people talk about credit reports all the time... Read More

Building Good Business Credit After Bad Credit

Can you establish good business credit if you have bad... Read More

Like It Or Not, You Have A Score To Settle!

Like It Or Not, You Have A Score To Settle!... Read More

Is Your Credit Score Being Held Against You?

Credit Scores That HurtIs your credit score being held against... Read More

Our World Of Credit Cards! Which One Is Right For You

There are not many of us who do not have... Read More

Credit Reporting: How Does It Work?

In order to determine a consumer's credit worthiness, creditors and... Read More

Finding the Right Credit Card

There are so many credit cards out there to choose... Read More

Make Sure Your Credit Report Is Correct to Improve Your Interest Rates And Lower Insurance Premiums

Did you know that you could make sure to get... Read More

Choosing A New Credit Card

1. Choosing A new credit cardThere are many reasons for... Read More

Student Credit Cards 101

If you're a college student, you probably already have a... Read More

Dealing With A Collection Agency

Step I - Selecting A Collection AgencySelecting a credit collection... Read More

Credit Cards - A Blessing or a Curse?

Owning a credit card can be quite an advantage. Whether... Read More

Why Does Your Credit Card Rate Keep Going Up?

Have your read your credit card contract through completely? Do... Read More

10 Tips To Prevent Credit Card Fraud

Imagine opening your credit card statement one morning and discovering... Read More

Credit Report Disaster Through Mistaken Identity

I've got some very important info I want you to... Read More

Bounced Checks - Straight Talk On Dealing With Bad Checks (NSF)

A check can be considered bad if it is bogus... Read More

Credit Card Disclosure Table ? Do You Understand It All?

In addition to the APR (annual percentage rate) and the... Read More

Student Credit Cards 101

Almost all students have and use student credit cards. Some... Read More

Free Credit Reports - How to Maintain Your Credit Profile

Maintaining your Credit ProfileEvery consumer should be maintaining their credit... Read More