Hiring a Debt Collection Agency 3 Questions to Ask First

When you run a business, some people are going to do everything they can to avoid paying your bills; it’s simply how the world works, unfortunately. However, if you run a business, you probably don’t have time to chase down every customer or client who owes you money.
So what do you do?

There are professional companies out there that specialize in debt collection management. You hire them to handle your debts, and, in turn, they spend the time chasing down your delinquent customers – so that you can focus your efforts on other, more productive things.

But before you hire a debt collection agency, there are 3 questions that you need to ask. Otherwise, you could be putting your debt collection management in the wrong hands!

1.What’s your rate?

A good collection agency will only charge you a fee if they recover your money. If your customer skips out on the bill entirely, you won’t have to lose even more money by paying your collection agency. While every debt collection agency charges a fee for its work, that rate varies from company to company – and it’s almost always based on the amount of money you’re trying to collect. Some agencies may charge 20% of the money they’re trying to recover, while other agencies charge 40%.

Additionally, some agencies’ fees go down for bigger accounts. So, you’ll wind up paying a smaller percentage if you’re trying to collect $5,000 than if you were trying to collect $500.

Before you agree to work with any debt collection agency, make sure that you’re comfortable with the fee arrangement.

2.Do you allow for negotiations?

In some cases, a debt collection agency will negotiate with the person that owes the money. If, for example, the person owes $1,000, the collection agency may be able to negotiate a lump sum payment of $700. The idea behind the theory is that it’s better to get some money than no money.

However, some people aren’t comfortable with that arrangement.If you’re adamant about having your collection agency recover every single cent that’s owed to you, then you need to make sure that they won’t negotiate with people on your behalf.

3.Do you handle nationwide debt collection?

Since debt collection management laws can vary from state to state, it’s best to hire an agency that handles nationwide debt collection. That way, no matter who your customers are – or where they live – your agency can track them down, legally.

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