How To Know When It’s Time To Hire A Collection Agency
While knowing when to send a past-due account to a collection agency is sometimes difficult, it is important to keep in mind that the sooner an agency has an account and can begin collecting on it, the more likely they are to successfully recover your money. There are multiple reasons to send a claim to a collection agency, some of which we will outline in today’s blog post.
If your business is too small to have staff dedicated to credit management and in-house collecting, you will likely need to hire a collection agency when customers don’t pay their bills on time. If you have very few employees, it does not make sense to direct such a large amount of your workforce towards making collection calls, and it is highly likely that an employee without training to make collection calls will have trouble collecting unpaid balances. While you won’t get all the money from every claim you send to collection as you would if you collected it on your own, the overall return will likely be greater if you employ a collection agency.
If an account is just too tricky for your credit department to collect, this may also be an indicator that a collection agency’s services are needed. Debt collectors know how to deal with tough debtors who always seem to avoid payment. They are specifically trained to deal with tough debtors and have the knowledge, tools and experience to get the job done where a business’s credit department simply can’t.
Another reason to consider sending an account (or accounts) to a debt collection agency is if the credit department has difficulty collecting quickly on the accounts. The longer a bill goes unpaid, the less likely it is to be collectible in the future: rather than letting the credit department attempt to get payment for a long period of time, you’ll likely see a larger return if you send the accounts to a collection agency instead.
In most cases where a debtor seems to have simply disappeared completely, it is strongly recommended that you send the account to a collection agency. Debt collectors have extensive resources available to help them track down debtors who have gone into hiding to avoid paying their debts, and are much more likely to find a missing debtor than a company’s credit department. Once they have found the person, they will know how to apply pressure to the debtor to ensure payment.
Of course, there are many other things to consider when deciding on sending a claim to collections or not, but these guidelines will help you know when it may be time to contact an agency. Remember, the longer you wait before sending a claim to collections, the less likely it is that the agency will be able to successfully collect on the account – so don’t waste time when making a decision.
About The Author:
Dean Kaplan is Principal at The Kaplan Group. Dean's expertise is widely recognized in the debt collection industry. His advice has been published in a number of industry newsletters such as Credit Today and InsideARM and he is a frequent speaker at industry events.