Picking a credit collection agency is possibly the most challenging and essential job. Some aspects you must consider while choosing a debt collector are:
- Experience and specialists
- Geographical presence
- Knowledge
- Charges and charging design
- Consumer referrals
- Collection Agency Services has covered this topic in depth through different complimentary collections reports and posts on this website.
Step II - Hiring the Collection Agency and Setting Up Processes
When you choose the debt collector, the very first 2 actions you need to take are:
Participate in a contract with the agency;
Set up processes on how you are going to communicate with the agency.
A contract is the legal document and your legal experts will, of course, prepare it correctly. Just make sure that you include important clauses such as confidentiality and non-disclosure. You are likely to pass sensitive information to the collection agency such as your account receivables, customer contacts, product and services pricing, etc. to facilitate faster debt collection. You wish to be sure that this details does not fall in the incorrect hands.
Establishing procedures is a crucial step in handling the debt collector. The success or failure of your collaboration will depend a lot on how well-defined your processes are and how strictly they are followed. Important procedures you have to specify are:
Internal procedures: You need to put in place a clear process on defining bad debt and referring the case to the collection agency. You do not wish to refer the case to the collection agency before you make a sincere effort to collect the charges internally.
Details transfer: How will you move the info to the debt collection agency about your dues and defaulting customers, and how will you get the details from your debt collection agency? Debt collection software can make the information transfer procedure simple and secured.
Third party dealing: As mentioned previously, it is essential for you to guarantee the security of the information you provide to the debt collector. The debt collection agency may use several of its involved agencies to obtain details about defaulting clients. Hence you have to establish a clear protocol on how much details they can show such third parties.
Communication: You have to establish single point contacts for communication within the business and the collection agency. In debt collection practices, the timing of communication is exceptionally crucial and thus it will go a long way in deciding the success of your debt collection procedure. Again, the value of debt collection software application can not be overemphasized here.
Action III - Performance Tracking
When all processes are set, begin keeping track of the performance of the debt collector. When dealing with a collection agency, this is an ongoing process. Crucial parameters to monitor are:
Quantitative
- Variety of cases referred to the credit collection agency and percentage of cases effectively resolved by them.
- Portion of debt recovered by the collection agency from all cases referred.
- Portion of debt recovered by the debt collector from solved cases.
- Portion of amount paid as fees/commission to the collection agency to the overall bad debt cases described them.
- Average number of days taken by the debt collector for full/partial credit collection.
Qualitative
* How well do the debt collector specialists handle your customers?
* Has the debt collector followed all legal requirements mentioned in the Fair Debt Collection Practices Act?
* Has the debt collector gone beyond the provisions of the Fair Debt Collection Practices Act?
* Has the debt collector followed all standards and procedures set by you?
Step IV - Agreement Closure
Ideally, the selected debt collector will work best for you. But if it doesn't, then you need to move all your debt collection procedures from the agency. You ought to keep in mind the following crucial points when you are ending the contract:
Confidentiality and non-disclosure stipulations apply even after the end of the contract with the debt Zenith Financial Network Inc collector along with its employees. The debt collection agency returns all files related to your company and damages all details related to your business from their data storage.
You are likely to pass sensitive info to the collection agency such as your account receivables, consumer contacts, item and services rates, and so on to facilitate faster debt collection. Setting up processes is an extremely essential action in dealing with the collection agency. The collection agency may utilize one or more of its involved companies to get details about defaulting customers. In debt collection practices, the timing of communication is extremely important and thus it will go a long way in deciding the success of your debt collection process. If it doesn't, then you need to transfer all your debt collection processes from the agency.
