Small business owners face the challenge of managing their debt levels at acceptable level because if they don’t receive the cash against their services or products, then they are doomed to get into bank debt and their cost of doing business increases.
Small business owners also face the challenge of finding right debt collection agencies, so that they not only ensure cost optimization, but also make sure that their receivables remain at lowest level. Let me demonstrate to you how you should go about recruiting a collection agency, with examples from three collection agencies.
Experience is probably the single most important thing to consider when choosing a collection agency. Cumulative experience of over a decade is nice decent experience and speaks volumes about the success rate of the company. Companies which are relatively new in the market can try to beat others with pricing, but experience always count.
For example, New World Collections is probably one of the oldest debt collection agencies in one of the US States, working since 1997. Twenty successful years of business means, the agency has mastered all the legal risk and complications of collecting your money from your clients.
Our second example, Eagle Accounts Group, has a total experience of approximately 7 years in industry,
The experience of a friend-social signals (i.e. the word of mouth) is another extremely important criteria to look for. Approach your friends who are doing business and ask for their suggestions. If you cannot find one, try to contact your local associations and trade bodies and they will greatly help by sharing with you the experience of their members with any collection agency you want to work with.
New World Collection is important to me because a friend has first-hand experience of working with them. What I learned from the personal experience is that the agency specializes in debt collection for dentists and carries other medical debt collection expertise also.
3. BBB Accreditation
Responsibility and conduct are other important criterias to look for as collection related matters can push you to the court. The legal risk of hiring a collection agency remains; you should therefore look for the ratings of external agencies, such as BBB, to understand the past behavior of the collection agency with others. Reading online history of the company on BBB website is a good free way to firm up initial opinion.
If you review BBB profile of New World Collections, you will find that it has zero complaints since last 3 years and some excellent reviews. Eagle Accounts Group’s website does not provide any indication whether it has been reviewed by BBB or not. However, my search on BBB website indicated that it has been reviewed by BBB. BBB received 1 complaint during last three years for collection issues and the website indicates that consumer did not accepted the resolution. It even contains 1 negative review about the service with no positive reviews.
For a small business owner, it is extremely important that the debt collection agency works with responsibility and provide the value for the service. To establish a long term relationship with any debt collection agency, it is extremely important that both parties mutually agree and work out affordable solutions.
Our third example agency, Allied Collection Services’ BBB profile suggests that the agency received 4 complaints during last three years however, there are no reviews available. BBB is being an unbiased, and professional bureau offers a good opportunity to any small business to actually understand and review the service before working with them.
Reviews on yelp or yellow pages is also another great starting point. What I have found great about New World Collections company is that it has some really great reviews on the sites which are unbiased and credible.
5. Size of the Agency
Large collection agencies have diverse experience therefore they cover different industries. They may not be good for you as their overall breadth of services may not be tailor made to your requirements as a small business owner. Big agencies can offer you cost advantage because of their expertise and reach into the market.
If you want to cut the cost and recover your debts with minimum cost, large agencies may be of great help, but make sure you are not getting minimum services with such low costs. Large agencies may also offer you help in terms of legal advice.
Allied Collection Service is relatively large collection service with more services to offer and to me, it is also one of its weaknesses. Generally, the businesses which offer large amount of services tend to lose their standards and fail to develop specialized set of services.
If you are a small business owner and not in the medical profession or provider of medical services, large service may not be for you. For effective and specialized services, you need a small but focused collection agency.
6. Other Services
Increasingly small businesses are working outside their original States also by providing online services. New World Collection is great in the sense that it also provides services in States such as Georgia, Indiana, and Kentucky. You can even track your account status through their well-developed web portal.
Allied Collection Services also offers secure online access to the web portal and offer language interpretation services also, which ultimately increases the cost for a small business.
The above demonstration gives you some important insights to look for when reviewing or searching for debt collection agency. Experience is probably the best indicator of whether the agency is worth working or not. Apart from this, you also need to see if the business has been performing ethically and responsibly for which checking BBB profile of the business is must. It gives you an indication of whether there was any complaint against the agency and if there was any, what was the outcome.
Irrespective of your location, if you are facing the uphill task of collecting your debts from customers, you need a debt collection agency and above is just a demonstration of how and what you should look into initially when you plan to hire external help for your debt collection. Good online reviews and a search on BBB can offer you a good initial feedback before you narrow down your search to hire debt collection agencies.