Advertising
Advertising

6 Tips for Small Business Owners: How to Recruit A Debt Collection Agency

6 Tips for Small Business Owners: How to Recruit A Debt Collection Agency

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.

1. Experience

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.

Advertising

Our second example, Eagle Accounts Group, has a total experience of approximately 7 years in industry,

2. Recommendations

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.

Advertising

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.

4. Reviews

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.

Advertising

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.

Advertising

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.

More by this author

Adnan Manzoor

Data Analyst & Life Coach

50 Free Online Resources for Self-Motivated Learners How to Relieve A Toothache When A Dentist Isn’t Nearby? Say Goodbye to Sleepless Nights! 10 Essential Oils That Help You Sleep Soundly. Are You Obsessed with Your Sneakers? They Can Be The Cause of Smelly Feet 5 Simple Tips to Reduce Stress and Stop Anxiety Quickly

Trending in Money

1 The Average Retirement Savings and How to Save Wisely 2 How to Invest for Retirement (The Smart and Stress-Free Way) 3 How to Nix Your Credit Card Debt in Less Than 3 Years 4 Top 5 Spending Tracker Apps to Manage Your Budget Smart in 2019 5 How to Use Credit Cards While Staying Out of Debt

Read Next

Advertising
Advertising
Advertising

Last Updated on June 6, 2019

The Average Retirement Savings and How to Save Wisely

The Average Retirement Savings and How to Save Wisely

Are you on track for retirement?

If not, don’t worry, I’m not sure either. I save each month and hope for the best.

Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

What Does the Average American Have Saved for Retirement?

Saving for retirement is tricky.

Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

Here are the average savings Americans hold by age bracket:

20’s – $16,000

During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

Advertising

Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

30’s – $45,000

At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

40’s – $63,000

This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

50’s – $115,000

During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

60’s – $172,000

By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

Ways to Save Money on a Tight Budget

The sad reality is that most Americans aren’t saving enough for retirement.

Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

Advertising

How to Save Money Each Month

By this point, you know the average amount of money you should have saved for retirement based on your age.

But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

Top Money Saving Challenge Tips

To prepare for your financial future and not be another statistic you need to be different.

How?

By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

Automatically Contribute Towards Retirement

If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

Advertising

Use the Right Tools to Know Where You Stand

Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

Bring in Experts to View Your Blind Spots

If you have too little or too much money saved, you should consider hiring financial experts.

Why?

You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

Regardless of the reason, getting help may help improve your financial situation.

Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

Speed up Your Retirement Contribution

After learning how to manage your money well, the next best thing is to earn a higher income.

You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

By starting a side-business.

Advertising

This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

Reach Financial Freedom with Confidence

What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

My guess is that you’d feel happy and relieved.

Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

If you do, you’ll save money and pay debt faster.

Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

Featured photo credit: Huy Phan via unsplash.com

Reference

Read Next