As the accounts of your company ages, it becomes difficult to correct them. In fact, it becomes expensive to continue carrying accounts that you will not be able to collect. At times, you need to concentrate on other aspects of your business such as sales and marketing. In order to do so, you need to hire the services of a debt collection agency. Using their services can be profitable for your business and can even help your business to grow.
What a debt collection agency does
A debt collection agency can help you to collect the delinquent accounts. Their staffs have adequate debt collection techniques and knowledge on compliance issues. With their better technology, they will be able to save you time and yield better results than what you would have achieved if you chose to collect the debt on your own.
When accounts gets to 90 to 120 days due, you need to place them under a collection agency. There are even companies that put their accounts at 60 days while others wait for 6 months or even a year. However, it is important to note that if a debt last for over a year, it can be difficult for you to get paid-though possible. If you have an account that is only growing older in your book, it is advisable to hand it over to a collection agency. When you just retain it in your book, it is not going to get collected and the percentage that you will pay to the agency is worth it.
Some of the signs that can show that you need the services of a debt collection agency include:
· A new customer who is not responding to reminder letter. When you promptly refer such a customer to a debt collection agency, you can reduce your potential loss.
· Payment term fail. There are some irresponsible consumers who will pay when and if they want. You can reduce the potential loss from this group by taking quick action.
· Consumers making unfounded and repetitious complaints. When dealing with such consumers, they are better handled by a collection agency. It is important to decide whether it is worth your time following after such a customer or whether you should pay a small fee to an agency to collect the debt on your behalf.
· Consumer fully denying responsibility. If you do not seek the help of a professional, you will have no option but to write off this kind of account.
· Delinquency coexists with some serious marital difficulties. These require professional assistance, with the debt collection agency before one or both parties can disappear.
· Repeated delinquencies accompanied by frequent change of job or address. This is the group that is responsible for all “skip”. A skip is a consumer who moves out without informing the creditor or leaving a forwarding address. Quick action is required for such a consumer as the chance of collecting the debt decreases with time. Most agencies have a skip tracing service.
Working with the debt collection agency
After you have agreed to work with the debt collection agency, you should provide them with as much information as possible. The information should be accurate as this will help to improve collections.