How to Choose a Debt Collection Agency
by Jeffrey Tulchin, President, STA International
Thinking About Hiring a Debt Collection Agency For Your B2B Debt? Here Are 10 Critical Factors To Consider.
Let’s face it: every business is going to come across unpaid receivables occasionally. Whether you’ve got a single thorn-in-your-side account or you’re looking at a column of past due invoices, partnering with a professional commercial debt collection agency can mean the difference between positive cash flow and painful write-offs. But how do you select an agency that seamlessly integrates with and BEST REPRESENTS your company?
When choosing a debt collection agency, there are several important factors to consider:
1. Does the agency specialize in commercial (business) debt collection?
Is commercial debt collection the agency’s core competency? There are significant differences between collecting consumer accounts (non-business debts owed by individuals) and collecting commercial or business debt. In order for commercial debt collection to be effective, each file/account needs to be handled with a unique, individualized approach.
Commercial collection specialists know how to get through to the debtor’s decision-makers. They’re experts in identifying and addressing potential reasons for non-payment during the debt collection process.
2. Is the debt collection agency certified by a qualified accrediting organization?
Only a handful of registered commercial collection agencies in the US are certified by the Commercial Law League of America (CLLA), the premier certifying body in the field. In order to be certified, agencies must adhere to the highest standards of professionalism. In order to maintain this certification, agencies must reapply annually and ensure that the rigorous requirements continue to be met.
3. Is the debt collection agency insured?
In order to protect both themselves and their clients, a professional collection agency needs to have the proper insurances. The most important policy from a client perspective is a surety bond that will ensure the receivables collected on your behalf. In a worst-case scenario, this bond provides clients a plan of action should the collection agency do anything illegal or unethical.
4. Does the debt collection agency have a reputation for being professional and respectful?
Regardless of whether you choose to do business with this customer in the future, the conduct of your collection agency is an extension of your company. When considering a debt collection agency, it’s important to determine whether they have a reputation for treating debtors respectfully.
5. Does the debt collection agency have the capability to manage both national AND international debts?
Many successful businesses today think globally. Can your commercial collection agency provide service throughout the world? It’s not uncommon for an agency to SAY that they handle international debt and then scramble to find an outsourcing partner if the situation ever occurs. Make sure that your agency has global experience and existing infrastructure to support it. If there’s any chance you’ll need to pursue debtors internationally, this expertise is critical.
6. Does the debt collection agency use the appropriate collection tools and resources for the job?
The best collection agencies have the proper tools and resources to ensure that they see the highest returns for their clients. These will include appropriate information technology, an active network of attorneys in every city and state, and a structured workflow.
7. Does the debt collection agency have a highly skilled and trained staff?
A collection agency’s front-line staff will be interacting with your clients. Ensure that those individuals are trained in current collection strategies, techniques, and compliance. Experience counts!
8. Does the debt collection agency provide real-time transparency into their efforts?
A client-centric collection agency will be sure to provide you the ability to get real-time updates on the status of debt collection efforts of your accounts. Whether it’s via an online portal or through a similar type of solution, you should be able to access information about your accounts whenever you need to.
9. Can the debt collection agency find your debtors?
Sometimes your debtors won’t be where you thought they were. Businesses relocate. Guarantors may no longer live where they did when they signed a credit application. Professional collection agencies will use a technique known as ‘skip tracing’ to find the current whereabouts of your debtors. The collection agency should have access to specialized databases – and training for collectors – that will allow them to locate a debtor who has left no forwarding address. A dead-end doesn’t always have to be a dead-end, and the best collection agencies know this!
10. Does the debt collection agency report to credit reporting agencies?
Letting commercial debtors know (at the onset of collection efforts) that their failure to fulfill their business obligations can impact their creditworthiness can incentivize faster payment. Professional collection agencies will maintain relationships with and report to business credit reporting services. Additionally, they’ll have access to useful information that can be provided by these agencies.
Above all: when selecting a debt collection agency to collect your business debt; remember that you’re choosing a partner and not just a vendor. Your ultimate goal should be maximizing your recoveries while ensuring that your organization is professionally represented in the process.
STA International – a management-owned business founded in 1955 – is a full-service commercial debt collection agency, providing commercial collections nationwide. We offer services that include US Debt Collection, International Debt Collection, Receivables Management, and Skip Tracing. With a reputation built upon professionalism and integrity, STA International is the ideal collection agency to represent your organization.