- Collection Agency Services has covered this topic comprehensive through various free collections reports and articles with this site.
Step II - Hiring the Collection Agency and Setting Up Processes
Once you decide on the collection agency, the first two steps you've to take are:
Enter into a contract with the agency;
Create 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 be sure that you include important clauses such as for example confidentiality and non-disclosure. You will likely pass sensitive information to the collection agency such as for example your account receivables, customer contacts, product and services pricing, etc. to facilitate faster debt collection. You want to make certain that these records does not fall in the incorrect hands.
Creating processes is a very important step in coping with the collection agency. The success or failure of your partnership will depend a great deal on how well-defined your processes are and how strictly they are followed. Important processes you need to define are:
Internal processes: You have to include place a definite process on defining bad debt and referring the case to the collection agency. You never desire to refer the case to the collection agency when you create a sincere effort to get the dues internally.
Information transfer: How will you transfer the info to the collection agency about your dues and defaulting customers, and how will you receive the info from your own collection agency? Debt collection software may make the info transfer process easy and secured.
Alternative party dealing: As previously mentioned earlier, it is very important for you yourself to ensure the security of the info you give the collection agency. The collection agency may use a number of of its associated agencies to get information regarding defaulting customers. Hence you need to setup a definite protocol on how much information they can give such third parties.
Communication: You'll need to setup single point contacts for communication within the business and the collection agency. In debt collection practices, the timing of communication is extremely important and hence it will go quite a distance in deciding the success of your debt collection process. Again, the significance of debt collection software can't be overemphasized here.
Step III - Performance Monitoring
Once all processes are set, start monitoring the performance of the collection agency. That is an ongoing process when coping with a group agency. Important parameters to monitor are:
- Amount of cases described the credit collection agency and percentage of cases successfully solved by them.
- Percentage of debt recovered by the collection agency from all cases referred.
- Percentage of debt recovered by the collection agency from solved cases.
- Percentage of amount paid as fees/commission to the collection agency to the total bad debt cases described them.
- Average number of days taken by the collection agency for full/partial credit collection.
* How well do the collection agency professionals deal with your visitors?
* Has got the collection agency followed all legal requirements mentioned in the Fair Debt Collection Practices Act?
* Has got the collection agency gone beyond the provisions of the Fair Debt Collection Practices Act?
* Has got the collection agency followed all processes and guidelines set by you?
Step IV - Contract Closure
Hopefully, the selected collection agency will continue to work best for you. But when it doesn't, you then need certainly to transfer all of your debt collection processes from the agency. You need to remember the next important points when you're ending the contract:
Confidentiality and non-disclosure clauses are applicable even with the conclusion of the contract with the collection agency in addition to its employees. The collection agency returns all documents linked to your business and destroys all information linked to your business from their data storage.
Following these simple guidelines will ensure that after coping with a group agency so it is most effective for you personally and your bad debts are minimized.