Money is an important factor in every business. Without cash flow, business management and operation becomes quite challenging. It is advisable that you should avoid operating your business in debts. Avoid taking loans or providing goods to your customer on credit whenever you can since it may result in a financial burden on your business. Nonetheless, there are times when debts are inevitable and you may require hiring professionals to assist you in the debt recovery process.
Since you have a business to manage, dealing with defaulters accounts is draining on your resources and time making the services of a debt collection professional beneficial. Research done by GGR Inc. experts revealed that debt collection agencies are different and not all will suit your unique business needs. Thus, when selecting an agency, there are certain factors that you will need to put into consideration.
There are various types of debt collection agencies. Therefore, you should research on the types of services they offer to allow you to find the best partner to recover your money. Some deal with home businesses and small businesses only while others excel in securing your funds from large organizations. Through your research, also conduct a background check to ascertain the legitimacy of your prospect agency.
Before hiring the money recovery agency, always ensure that it is licensed, bonded, and fully adheres to the rule of the Fair Debt Collection Practices Act. There are times when your debtors will skip town hence you should ensure that your agency uses ‘skip tracing’ before hiring their services. Through skip tracing, the collection agency can use and has unlimited access to very many databases that enable them to find your debtor who has left no forwarding address.
Though you may find the perfect debt collection agency for your business, there are high chances that they will use aggressive means to recover your money. If the debtor feels like your agency acted in bad faith, they can sue. The outcome of the case does not matter but you should ensure that you are not held liable for hiring the agency.
Before hiring them, make sure that the debt collection agency has a proof of Errors and Omissions Insurance. The Insurance is important for protection from the heat of a court case if your debtor takes you both to court. After finding the agencies that are legitimate, fully insured, and suit your particular needs precisely, you can then compare their costs.
The way of charging varies from one agency to the next. Therefore, you should scrutinize their charge sheets carefully to find the ideal one to recover your money. Some of the primary payment structures include a flat fee. This fee is primarily associated with ‘pre-collection’ fees and it is considerably small. You will have to provide the agency with that flat rate amount early in the money recovery process.
A contingency fee is also charged many agencies with a majority of them using a ‘No Collection – No Fee’ model. They will charge you approximately 25% - 45% of the entire collection amount and it depends considerably on the particulars of your debtor’s account. This fee varies depending on the contacts made and how old the account of the debtor is. If you want to forgo fees all together you may want to consider debt collection software instead.
Always keep in mind that when you hire a debt collector agency, you will receive partial amount you are owed since a portion is retained by the agency. Nonetheless, a debt collector agency is a great option for you especially mainly where you have failed to recover your money.