Almost every business out there wishes to increase its sales and in recent times, especially after the 2008 recession, giving goods on credit has become the new norm.
Bigger companies are taking advantage of it and now there are certain policies that help small start ups to take similar initiatives as well. However, as having receivables can be a good sign to facilitate more international and local clients, it then raises the risk of bad debt as well which can take down any business from the top.
When such a disaster starts to happen, a debt collection agency becomes the only saving grace. But that is where more trouble begins as companies often make the mistake of hiring the wrong agency or at least the ones that don’t fit their requirements or the budget.
As this is an unfortunate reality of this era of globalization, we have decided to help you in the matter by listing down all the expert tips and tricks that you should know and try while looking out for the best debt collection agency.
All you are required to do is be more vigilant and follow what’s written down below because all of the information is based on recommendations coming from top companies and experts who already deal internationally.
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Specialization
As there is no doubt in the fact that one should begin their hunt by looking out for the number of years a company has operated, still if there is something that should be given more preferences then that has to be what do they really specialize in. You must select the company on the basis of whether it suits the requirements of your business or not. Hence, it is important to know whether the agency has collected debt for a company similar to yours or not.
If in case you have sold goods to customers in a completely new territory and are unable to find a specialized agency there then your best source to find such a companion can be accountants, attorneys, or even the local chamber of commerce for valuable suggestions.
Creating A List of Candidates
If you are lucky enough to find one agency then that doesn’t mean you should stick with it because that will then give the agency the advantage of setting their own terms and conditions with you due to no competition. So, the best trick is to always make a list of companies that fit your requirements and then interview them on an individual basis before you make the final decision.
You should also meet the agency’s local contacts and their clients in order to get an overview of their overall reputation.
License
As soon as you finalize on hiring an agency, make sure that you are trusting one that has the license to collect a debt from all the states where you have clients and know whether its practices include skipping tracing or not.
If you are not going to keep an eye on this requirement then your agency would not be able to skip tracing, which is an essential step to track a debtor using databases when the debtor decides to hide or go away without leaving an address or a phone number. Moreover, unlicensed agencies aren’t also allowed to collect debt for you from any state you want them to.
Insurance
Along with the license, you must also ask the agency about whether they are insured in all the states or at least in the one where you have a debtor or not? Doing so will help you find a collection agency that will have Errors and Omissions insured. This eventually provides you and the collection agency the protection which comes into play when the debtor plans to sue or the situation becomes worse.
Fees
Another important thing that you must keep in mind is to discuss the collection agency’s fees beforehand and also the success rate in debt collection. You should be well aware of the setup fees or if the company will charge according to a certain percentage of the debt amount collected.
The goal is to not find the best agency with fees that might turn out to be way beyond your budget. Instead, you should look out for the one that provides you value for money after you are doing the cost to benefit analysis.
For a similar reason, you can also ask for references about the collection agency from the businesses that operate in your kind of industry.
Fair Debt Collection Practice Act
To seek help in this matter, you will have to depend on the information provided by the agency’s references which are related to your industry. Here you would be required to know if the debt-collection agency participated in and followed the Fair Debt Collection Practice Act or not.
Participating in the Fair Debt Collection Practice Act is required by law if the agency really cares about abiding by the collection rules and obligations. The law includes important things like to not use profane language, one cannot harass the debtor in any scenario, furnishing a list of the debtor for sale in lieu of nonpayment, or calling excessively to annoy the debtor is also considered a form of harassment and violation of the Fair Debt Collection Practice Act.
If such a violation takes place, it can also cause termination of the collection agency as well.
In the end, all of these tricks lead to one solution to the common problem and that is they can help you in developing your trust in the agency for international debt collection. If you find an agency that ticks off all the requirements as listed above then our suggestion would be to go by it and you won’t ever face any unnecessary risk.
While we pretty much agree that getting money from difficult customers is more often than not on chance, a debt collection agency can put in all the pressure that your internal credit control departments may not be able to exert.
