As a small business, you should do all you can to make the most of your profits. So when a client doesn’t pay what they owe, it’s important to take steps to retrieve that money. Debt collection agencies are an ideal way to ensure that your company gets paid. But how do you choose the best debt collection agency for your small business?
Obviously, you want a collection company that retrieves the maximum amount of debt owed to you, but beyond that, you want a debt collector that is transparent about their methods and costs and one that presents themselves in a positive manner to your clients. Below are three considerations for hiring a debt collection agency for your small business.
One: Find a Debt Collection Agency That Works With Your Small Business
You want a debt collector that is a partner, not a company with its own interests at heart. Just as a business consultant will work to improve your bottom line through methods that are specific to your organization, the right collection agency will partner with you to develop accounts receivable systems designed specifically for your company.
A collection agency doesn’t work separately to retrieve your funds. Instead, as experts at recovering debt, they should review your accounting process and recommend methods for improving in-house collections.
Two: Choose a Debt Collection Agency With Quality Customer Service
Thirty years ago, debt collectors had a bad name. The mere mention of the profession conjured up images of an angry, persistent bill collector making phone calls during dinner or late at night and yelling demands and threats when unsuspecting debtors picked up the receiver from the phone cradle. Of course, this perception was only a stereotype that thankfully has been replaced by the friendly, helpful manner of modern debt collection agencies.
Today, debt collectors reach out to customers with delinquent accounts and offer them numerous ways to catch up on their payments. For instance, they may contact customers before the debt gets out of control or assist debtors by creating individualized payment plans that fit their budgets. Collection agencies may also offer various payment choices – like a check, money order, or credit card – and methods – such as through the mail, over the phone, or online.
The debt collection agency for your small business should provide that same helpful customer service attitude when dealing with your staff. They should be accessible and preferably be a local or national agency, rather than outsourced, in order to maintain a personal, friendly relationship with your clients.
Three: Look Beyond the Collection Percentage When Choosing a Debt Collection Agency for Your Small Business
As a small business owner, you may want to choose a debt collection agency for your small business based solely on the percentage that’s charged. After all, we’re accustomed to walking into a store and looking at a price tag that reveals a set price we must pay. However, there is so much more that makes up the overall value of a good debt collection agency. While the percentage itself is a vital piece of the puzzle, don’t neglect all of the other pieces that make up the whole picture.
Research each possible agency to determine which one can actually increase your profits by collecting more money for your business. For instance, one agency may have a low percentage, which sounds good initially, but upon further investigation, it’s apparent that they focus mostly on easy-to-collect debts, ignoring all other accounts. Oftentimes, agencies with higher fees have greater recovery rates and better ROIs.
When searching for a debt collection agency for your small business, always ask about results they’ve achieved with other businesses. Look specifically for their performance with companies in your industry or those of comparable size.
You may also wish to ask local businesses for referrals of which debt collectors they’ve found effective or if they have experience with any of the agencies that you are considering. Check with your business contacts, the Chamber of Commerce, and the Better Business Bureau to get an accurate picture of each debt collection service.
Finding the right debt collection agency for your small business might seem like an impossible task, but with a little time and scrutiny, you’ll find that your cash flow improves immensely. If you properly compare different agencies before making a decision, you’ll find that you have a true business partner that is just as concerned about your company’s success as you are.