Are you doing what you can to get money from debtors? Your business thrives on accruing revenue. The process of collecting due payments can be difficult, however, when multiple clients and accounts are involved. In today's uncertain economy, many companies are using collection services to help them retrieve their money.

Collection agencies work on behalf of your business to recover funds owed to you. Often clients and buyers do not distinguish between collection companies and the companies that hire them. This means you should choose a collection service company that performs its duties in a professional manner.

Is It Time to Hire a Collection Agency?

Often businesses are not sure when they need to seek help with collections. Consider using a collection service if one of the following scenarios occurs on a regular basis:

• Customers make repeated complaints to evade payment
• Customers deny owing payments despite concrete evidence that they do
• Customers are not receptive to collection notices or payment options
• Customers change contact information without letting you know

How Collection Companies Function

Through mail and phone calls, collections services communicate with your clients to inform them of their payment options, including establishing payment plans, encouraging immediate payment, or enforcing further legal action to collect the highest percentage of debt.

Collection agencies must work in accordance with the federal Fair Debt Collection Practices Act, which requires fair and respectful treatment of debtors. This ensures your clients are treated well on your behalf.

Functions of a Collection Agency

As in any industry, the services that companies offer can vary widely. Nevertheless, a good collection agency should provide each of the following functions:

• Skiptracing. This enables the service to find clients who can no longer be reached at a prior address or number.
• Information sharing. Choose a service that can share and exchange information with your company through their systems. A clean exchange of data makes it easier to analyze how well the service is working for you.
• Billing services. A reputable collections service can take care of many of your billing needs, from accounting and telemarketing to coding, printing, and mailing.

In addition, various other capabilities are at your disposal. Consider inquiring about:

• Payment processing
• Payment consulting
• Campaign calling

What to Look for in a Collection Agency

It's good practice to search for a collection company with experience in your industry. Experience can make the relationship more comfortable and can increase the likelihood of success in collecting your debts.

When you start looking for a reputable company, ask for references from various agencies and contact clients they've worked with in the past. These contacts can provide invaluable information and offer a view of what working with the firm in question is like. Once you've narrowed down your search to one of two good candidates, take a look at how each of them performs the following:

• Debt collection. You want to collect your debt, but you also want your clients treated well. Examine the methods the collection service uses to contact debtors and retrieve funds.
• Geography. Inquire about geographic capabilities. Some states require collection services to obtain a license before collecting debt in the state. Ask your service about the geographical areas they cover.
• Legal issues. Some debtors may attempt to sue you and/or your collection agency for harassment. An Errors and Omissions Liability policy can protect you and your service. In addition, be aware that sending an account to two separate collection services is illegal.

Outsourcing provides the ability to shop around for a collection agency that is the right fit for you. It is common to contact and receive information from multiple collection agencies before making a final decision.