Even the most efficiently run business occasionally encounters some delinquent customers. Your company probably has its own accounts receivable process, of which the final step might be turning over a drastically past-due account to a collection agency.
Because some states don’t regulate collection agencies very closely, some of these businesses can engage in unethical activities that could reflect poorly on you. Thus, you want to select a provider carefully. When shopping around, look for these five features:

1. Good references. Ask for and check these diligently.

2. A timely payment policy. The collection agency should deliver money to your company no later than 30 to 45 days after receiving it from the debtor.

3. Clear and concise forms and reports. An agency should provide you with well-written and organized account placement forms and reports, which reflect the accounts you placed with the agency. You should receive these documents immediately, and they should help you track all accounts placed with the agency.
Typically, the forms list, in addition to the creditor’s information, full details — such as name, address, telephone numbers, e-mail, contact person, the amount due and any known reason why the debtor isn’t paying. The documents demonstrate and ensure that an agency is properly logging your accounts. Request samples before deciding on an agency.

4. Regularly submitted, clearly written account status updates. An agency should, at least quarterly, provide you with account status reports that explain what stage of collection your accounts are in. Examples include partial payment arrangement, settled in full, paid in full, bankruptcy or litigation recommended.
The agency should notify you whenever a debtor offers a possible settlement. It’s essential that the agency’s authority to settle is clearly understood by both agency and creditor. Request a sample status report before you place any claims for collection with an agency.

5. Excellent communication. Make sure that you can reach a human being when you want to call to discuss your accounts — not a recording or artificial-intelligence chatbot. The agency should respond to voice mails and e-mails quickly and completely. Friendly service is a plus!

Legal Features to Look For
In addition to looking for the five features described above, do some due diligence into these three legal aspects of a collection agency:

Attorney affiliations. A collection agency should be affiliated with lawyers who have expertise in creditor rights and commercial litigation. Generally, agencies are associated with the Commercial Law League of America (CLLA) and the National Association of Retail Collection Attorneys (NARCA).

ttorney involvement. What criteria are necessary before referring a case to counsel? Insist that an agency seek your permission before making a referral. Also, ensure that you’re consulted and given final approval when a debtor settles. If the case is litigated, be aware that you’re usually responsible for court costs and the agency’s commission fee will likely go up.

Professional communication. Since a collection agency is your duly authorized agent, the actions of its representatives reflect on your business. In addition, there are laws that protect consumers against harassing phone calls from debt collectors. Ensure that all contacts the agency makes with delinquent customers are handled professionally. Insist on proper treatment and get confirmation that the agency handles cases in a dignified, legal manner.

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