Things To Watch Out For
- Don't shop for the best price.
Make sure the collection agency is long established,
financially stable and creditworthy. By transferring
your collections task to an agency you are in effect
extending credit to the agency. You must be certain
to receive payment from them. Beware of the less reputable
collection agencies. Some of their methods are unprofessional
and unethical.
- Make sure the agency is a member of the
Credit Services Association (CSA). These
agencies have to work within specific guidelines and
by ensuring the one you choose is a member, helps
to guarantee they will play by the strict rules imposed
upon them.
- "No collection, no fee policy".
You should not have to pay if your debt is not collected.
Most agencies never charge unless they get the debt
collected, so if the one you are considering does
charge no matter what the outcome, its time to look
again.
- Minimum charges and handling charges.
Look out for minimum charges per invoice and handling
charges that become due if you withdraw the invoice
collection from the agency
- Reputation and references. The
debt collection agency will be a critical interface
with your customers. Make no compromises. Work with
a reputable firm to eliminate all risk of negatively
influencing your customer relationship. Ask for references.
Check if the collection agency is a member of the
Credit Services Association.
- Personalised service. Particularly
if you are a small company; make sure to have a customer
service team available for you.
- Exports collection capability.
If you export, make sure the agency has an own network,
or affiliate partners, in your customer's country
to provide on the spot collection.
- Credit insurance. Most collection
agencies offer insurance to protect you from bad debts.
- Chose the debt collection agency according
to your customer profile. Whether your customers
are other businesses or individuals is an important
criteria in choosing your collection agency. Some
agencies, for example, do not collect against individuals.
- Transfer restrictions on your outstanding
invoices. Make sure there are no existing
contractual arrangements that do not allow you to
transfer your outstanding invoices to a debt collection
agency. (For example, a loan that is secured by your
outstanding invoices).
Also check out our Disadvantages
Page >>>
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Debt
Recovery Guide
