Facts About Debt Collection
Debt collection isn’t a popular subject, but it’s most certainly an important one. If you’re a small business owner, you probably have realized how difficult it can be to get paid when a client or customer simply can’t or won’t settle their debt.
What Is Debt Collection and How Does it Affect Me?
Most of your customers are probably responsible and prompt at paying their bills. Unfortunately, there are always some folks that don’t quite live up to their obligations. Generally speaking, debt collection deals with collecting from people in one of three categories:
- Customers and clients who will do anything or go to any length to avoid paying their debts
- Customers and clients who tend to have quite a few payments due at the same time and pay them sporadically
- Customers and clients who usually pay their bills on time, but have run into a financial hardship that keeps them from paying
Usually, a small business owner can quickly identify a client who falls into the second or third category. They’ll have a history of making full or partial payments, so you know you’ll get paid at some point. The first group, though, is more problematic and you’ll need to come up with a strategy for dealing with them. That’s where debt collection, and a debt collection agency, comes in.
How Does Debt Collection Work?
Debt collectors have to follow the Fair Debt Collections Act, which protects consumers from harassment or fraud. The law is very complex and specific about what debt collectors can and cannot do. A debt collector will contact the client or consumer, advise them of the debt, and offer a way for them to pay it.
For the small business owner, a debt collection agency like MCA will help navigate the debt collection process for you. We’ll reach out to your customer, advise them of the debt, and offer them multiple payment options. We can accept their payment over the phone, through our website, or set up payment arrangements.
If an account needs to be reported to the credit bureau, we handle that. If necessary, MCA can also refer the account for legal action. From start to finish, we provide you with personalized reports so you know what’s being done to collect.
The best thing is, we don’t get paid unless you do!
How to Hire a Debt Collection Agency
Hiring a debt collector is a straightforward process, once you’ve found the right one. To hire MCA as your reputable debt collection agency, just fill out our brief contact form or call us. We’ll get the information together, advise you of all of your options, and then get started collecting your debt.
What to Look For in a Debt Collection Agency
There are 5 things you want to look for in a debt collection agency. These will ensure you are working with professionals who will successfully collect the money you’re owed.
- Research your needs, because some agencies specialize in certain areas. Find out what sort of debtors the agency most often collects from and what sort of businesses it works with.
- Verify the agency’s legitimacy. Various states and localities have different rules, but all have to follow the Fair Debt Collection Practices Act. You’ll also want to ensure the agency is bonded and licensed.
- Sometimes, a debtor will skip town. Good collection agencies use skip tracing, accessing databases that will help them track down these clients. Make sure your agency uses skip tracing to have the best results.
- Make sure the agency is properly insured. It doesn’t matter how much research you do, there’s always a chance the agency uses aggressive tactics. Or, the client might claim the agency misled them or acted in bad faith. This sometimes leads to lawsuits, and the agency’s insurance will protect you from that liability.
- Finally, compare collection agency fees and contingency costs. Not all debt collections are created equally, so you want to hire the collection agency that’s the best balance between fees and success in collecting the debt.
Important Things to Remember When Working with A Debt Collection Agency
When you’re working with a debt collection agency, keep in mind that you need to have a plan for what to do if the client contacts you directly to pay. MCA will always allow the debtor to pay their bill directly. You, our client, need to keep in touch with us about that, though. Otherwise, we will continue trying to collect it. That can lead to further problems down the road.
Also, remember that we don’t get paid unless you do. So, you should provide us with any information you may get on your customer that might help with collection. We’ll be sending you periodic reports on our actions, so be sure to read those and let us know of any changes.
We hope you’ll never need a debt collector, but if you do, we are here to help you every step of the way.