How to Choose a Professional Collection Agency

©2000 Michelle Dunn

You should be very careful about choosing a collection agency to work with. No matter which agency you choose, they are a reflection of your business.

Make sure the agency has the skills, knowledge and experience to collect on your particular type of account. This could be medical collections, service debts, student loans, child support or many other types of debts. It is important for agencies and creditors to know that each collection market is handled differently.

Discuss recovery percentage and rates. The percentage rate of commission may be less important than the agency's percentage of return on the total dollars you refer for collection. If you turn over many accounts but the agency doesn't collect many of them, even if you are being charged a lesser percentage rate, you may not be getting enough bang for your buck. An example could be that you place $1000.00 worth of debt for collection, at a 25% commission rate and the agency collects $300.00, you will receive $225.00. If you place $1000.00 at a 35% commission rate but the agency collects $500, you will receive $325.00. The commission rate by itself is meaningless, net return is the key.

Try to contact creditors in your industry that are currently using the agency. Find out if they are happy with the services. You can also contact any associations the agency may belong to, the Better Business Bureau or the Chamber of Commerce.

Make sure the agency complies with all state licensing and bonding laws. Find out how long the agency has been in business, how many clients they have, if they have won any awards and if they have insurance.

Make sure the agency you choose complies with the Fair Debt Collection Practices Act (FDCPA), this is critical. These are the laws that regulate the collection industry. Also, what can the agency do for you? Do they report to the major credit bureaus? Do they provide skip tracing? Is there a monthly or a sign up fee to do business with them?

You want to choose an agency that will represent your business in a professional manner. You want a satisfactory rate of recovery while maintaining your public image. Your careful choice in choosing a collection agency strengthens your bottom line and helps you to retain customers leading to a more profitable business.

Michelle Dunn started and successfully ran M.A.D. Collection Agency for 8 years, and has received wide press with articles appearing in Ladies Home Journal, PC World, and many other magazines and newspapers. Michelle owns and operates www.Credit-and-Collections.com (an online professional collections community for networking and discussions) and Never Dunn Publishing, LLC.

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