- How Much Do You Charge?
Most collection agencies work on a contingency rate. Basically, this means the collection agency keeps a percentage of the money they collect. If no collection occurs then no money is owed to the agency. The rate depends on the age of the debt, amount of the debt, and type of debt.
2. What Do We Need To Send You?
Most businesses ask this question once they have decided they are ready to use a collection agency. Typically, all the proof of debt that is needed is a copy of the invoice or bill that was originally sent to customer. If you have any additional information, such as the mailing address, phone number, e-mail address then those should be given as well. Any information you have on the debtor will help the collection agency collect the debt successfully.
3. How Far Past Due Can The Debtor Be?
Most states in the United States have a certain Statue of Limitations to a debt. Most states vary anywhere from 3 years up to 10 years. While collection agencies will attempt to collect older debts, we do not advise to let a debt get several years old. The older the debt gets the less likely the debtor will pay. Turning the debt over as soon as possible will increase the odds of getting paid and will also get a more competitive rate from a collection agency which results in more potential revenue for your business.
4. How Do You Collect The Debt?
Many businesses are curious the tactics that collection agencies utilize to collect the money owed. Most collection agencies have access to skip tracking tools that help them locate debtors who are hiding. They can find additional unpublished phone numbers or even where the debtor is now working or living. Once they locate the debtor, professional collectors will negotiate with debtors to come up with a payment plan to get the debt paid off.
5. Does The Customer Pay Us Or You?
Once you have entered an agreement with the collection agency, the collection agency is responsible for collecting the debt on behalf of your business. Some customers may not feel comfortable paying the collection agency and would rather pay the business directly as they are more familiar your business. If the debtor pays your business directly, you will still owe the collection agency the agreed upon amount based on the contingency rate and amount collected.
6. What Happens If The Customer Doesn’t Pay?
This is a quite common outcome as collecting a bad debt is never guaranteed. Customers may simply refuse to pay or they just do not have the money to pay due to a change in circumstances. A collection agency should stay persistent and get multiple refusals before giving up but eventually they may determine the debt is uncollectable.
7. Do You Collect On Small Debts?
Yes, we can collect on debts that are small. Most collection agencies prefer to collect on larger debts that are $10,000 and above but we can collect on smaller debts that are even just a few hundred bucks. No matter if you have one customer that owes $300 or several customers that owed $100 each; we can collect on those debts!
8. Do You Report To The Credit Bureaus?
Many collection agencies do not report to credit bureaus because of the extra cost and work included but we report all debts to the major credit bureaus. We believe that reporting the debt on a debtor’s credit can be an important motivating factor to get them to pay. It is just one tool in collection agency arsenal but it can be the tipping point to getting your business repaid in some instances.
9. What If We Do Not Have The Customers Phone Number?
This isn’t the end of the world. As we said earlier, provide as much information as you can about the debtor. This will help the agency skip trace to find a new number. Any invoices, contracts, mailing address, ect. Any information can help the collection agency find a good number for the debtor which will open the line of communication to start the debt collection process.
10. How Do We Start?
Once a business decides they are ready to hire a collection agency then they usually ask, “How can we get started”? The process of getting started is rather simple. It usually involves signing the initial contract which outlines they you are entering into an agreement with the agency to collect the debt at a specific contingency rate. Once the contract is signed, the debtor will place the account via the collection agency customer portal or through e-mailing over the information such as invoice, ect.
If you have any other questions that we did not cover regarding hiring a collection agency for the first time, please do not hesitate to contact us via email or by phone. You can also submit a quote request and we will be glad to provide you a risk free quote.
Is your business collecting debt from individual consumers or other businesses?
Collect from businesses only
Collect from individual consumers and businesses
Roughly how much debt are you looking to collect?
$100,000 or more
Roughly how many accounts are you looking to collect from?
100 or more
On average, how long have the accounts been past due?
Two to six months
Six to 12 months
One year or more