How to Hire a Debt Collector

Once a company is faced with past due customers, knowing how to hire a debt collector can be a overwhelming task. They are many debt collection agencies you can choose from, but selecting the right agency will result in a boost to a company’s bottom line.

If a company has never attempted to hire a collection agency, typically they will have many questions before feeling comfortable with making a hire. Below, we will cover some of the most common questions companies will ask.

How much does it cost to hire a collector?

Most debt collectors will work on what is called a contingency rate. This means, a company will not be charged any fees upfront. The collection agency will keep a percentage of the money collected.

For example, a company is owed $3,000.

The debt collector offers a contingency rate of 25%.

The debt collector works on collecting the debt. The debtor agrees two weeks later to pay the balance in full.

The company keeps $2,250, while the collection agency keeps $750.
The worst case scenario, if the agency is unable to collect any payments then a company owes the agency zero.

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How to collect bad debt?

Many companies will attempt to collect the debt themselves but after some effort will run into roadblocks. After several weeks of chasing the debtor with no payment secured, they will often ask, “How does a collection agency collect bad debt”?

A debt collector with experience will have many collection tactics they use to successful collect on a bad debt.

A debt collector will have access to skip tracing tools to help locate debtors who have changed mailing addresses or phone numbers. Collectors also have the ability to negotiate payment from debtors who are going through a hard time financially without making the debtor mad. Once the collector has convinced the debtor to pay, coming up with a payment schedule to bring the account current and processing the payment is the final step.

How to find a debt collector?

As mentioned early, debt collectors are quite plentiful. Understanding how to select the best debt collection agency for a company is the important part.

You can find many debt collection agencies by going online and performing a search. After some initial browsing, your head may start spinning with too much questions and not enough answers.

Here are some general tips to follow while looking to hire a debt collector

1. Industry Experts– After some browsing, you may notice that most collection agencies have certain industries they specialize in.

For example, one collection agency may specialize in Construction collections while the next agency may be the best martial arts collection agencies.

Obviously, a collection agency that spends all day calling construction companies will have a much different approach than the agency who is calling parents who are past due on karate monthly dues.

2. Fully Licensed– All states have different licensing and bonding requirements. Confirm the collection agency is licensed to operate in the state your business based out of. Furthermore, the collection agency should be fully insured.

3. Communication– If the agency is hard to get on the phone when they are earning your business, how can you expect them improve once they already have secured you as a client? You want to hire a bad debt collector who will answer any questions you have quickly and clearly.

4. Reputation– Does the collection agency have positive reviews online? Can they provide several referrals from companies within your industry? If a collection agency has zero online reviews and no referrals, they be a brand new agency which can be a risky proposition.

5. Experience– How long has the collection agency been in business? If a collection agency is just starting out, they may not have the experienced debt collectors to get the best results. Plus, new businesses are more likely to file for bankruptcy which increases the risk of clients not getting paid. Put simply; hire a small business collection agency that has been operating several years.

The information above will allow you to know how to hire a debt collector that will be reputable and effective representing your company.

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