A credit collection company may be your best option when you need to collect on accounts that are seriously delinquent. Retailers, banks, hospitals, contractors, and more – businesses of all types and sizes can have difficulty collecting overdue payments. When you’ve exhausted all ordinary efforts to collect on a bad debt, it’s time to turn to a professional recovery agency.
How will a debt collecting company recover your debts?
A credit collection company is a firm staffed with skilled agents who will work to persuade clients to pay their outstanding debts. While you may not have the time to get clients to own up to their responsibilities, the debt settlement company is paid to be persistent – they should have a track record of encouraging the most reluctant clients to make payment arrangements.
The agencies will use a number of tactics to encourage clients to pay what they owe you. These methods include:
- Personal phone calls
- Personal contact
- Letters
- Faxes
Acceptable methods do not include harassment, threats, or other types of questionable behavior – see below for more on the laws associated with this.
Who pays for it?
As the creditor, you are responsible for paying the agency.
Each debt recovery company will have its own rules for payment. Most work on commission: you pay a set amount or percentage for every account they successfully collect. Other companies are paid by the hour or by the number of accounts.
In our opinion, you’re better off paying an expert a percentage of the debts they recover: it gives them an incentive to be persistent, and it means you salvage at least some of your bad debt.
As the creditor, you have the option of working with one or multiple agencies. If your business is large and offers a variety of services or products, you may benefit from using different agencies to collect on different types of accounts.
You also may find that one agency is better at the real hard-to-collect debts than another. Don’t be shy about switching agencies or distributing various types of old accounts to multiple collectors.
Just be sure you don’t distribute the same debt to multiple agencies: that’s a violation of the law.
The Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act ensures all debt collecting efforts follow certain rules and standards. They dictate that every business debt retrieval agency acts in a professional manner no matter how frustrating the job can become.
The rules these companies must follow under the Act include:
- Contact clients only between 8 a.m. and 9 p.m.
- No harassing phone calls
- No profanity
- No derogatory language or threats
- No threats to call the police or law professionals
- No threats of bodily harm
- No threats of criminal charges
- No threats to garnish wages
- No threats to seize property
- No threats to sell assets
(Note that in some cases, a creditor’s contract can actually allow wage garnishment, but this is quite rare.)
The rules actually help the company’s agents keep up professional standards. However, if you have attempted to collect debts in-house you know how difficult it can be when debtors react with their own threats, profanity, and unpleasant behavior. Simply taking that headache off of your own staffers is another great reason to use a professional firm.
Credit Collection Company Prices Paid
Pricing details: We went with a local company that took 25% of the funds collected.
– Non-Profit, Columbus, GA
Pricing details: After speaking with different credit collections agencies, we decided to go with a company that took 33% of the fees collected. They were highly recommended.
– Wholesale Industry, Columbus, OH
Pricing details: We were contacted by a few different companies. We went with a company that charged $180 for 1 yr service. Collecting up to 4 accounts in 1 yr.
– Real Estate Industry, Elburn, IL
Pricing details: We were looking for information from different business debt recovery agencies. We decided to work with a company that was only going to take 15% of what they were able to collect.
– Wholesale Industry, Brooksville, FL
Pricing details: I entered a 1 year contract with a company that would allow me to pay them quarterly.
– Real Estate Industyr, Tijeras, NM
Pricing details: We are working with a credit recovery company who charged 30% on debts collected without legal action. It’s 40% if legal action is needed.
– Consulting Firm, Portland, OR
Pricing details: We decided to go with a company that only gets paid a percentage of what is collected. Included in the service is an online update which provides notes from each collections agent. – VERY HELPFUL
– Non-Profit, Colorado Springs, CO
What other people are looking for
Looking for an accounts receivable recovery company. We provide search engine marketing services and do so in 6 month contracts. The client has not paid us since May and canceled in July. They owe us $7,500 in total.
– Advertising Company, Newport Beach, CA
We are an engineering company and we provided services for a company. The total amount due is $10,986 and we have not been able to get in contact with them at all. We are looking to receive information from a few different agencies.
– Business Services Company, Ventura, CA
We are an Air Conditioning Sales, Service and Installation company that is continuing to grow. We need the help of a credit collections company to get all of our old debts collected and keep everything current going forward.
– Construction/General Contracting Industry, Holly Hill, FL
We are in need of the services of a debt recovery company. 2 dentists ordered our products and we shipped these products to their residence as requested by the buyer. They were delivered and signed for at the residence We have not been paid by these dentists and they provided us with a telephone number that is not in service. Total amount outstanding is over $9,000/
– Health Care Industry, Blaine, WA
We need help collecting on past due accounts. We have a company that owes us $4,058 for services and parts that we provided for them. We have been unable to reach anyone regarding the payment of the past due invoices.
– Manufacturing Industry, Cincinnati, OH
I am the owner of an operated trucking business. I am looking for the services of a credit collections company to help me collect from a freight broker that I did work for. I have been trying to collect this money for about a year now.
– Transportation/Logistics Industry, Gardena, CA
My company is looking for a reputable credit company. We had a credit card agency do work for us at one of our events and they processed 50K worth of sales but we have not received any of that money as of yet.
– Consulting, Zephyrhills, FL