If you have decided to hire a collection agency, such as National Collections, to collect your outstanding debts or invoices, you may need to compare several agencies to figure out which one you like the best. When looking at different agencies, ask them these four questions. Their answers will help you identify the best agency for your needs:
1. Do you offer skip tracing services?
Depending on how old your invoices or unpaid bills are, you may not have the correct contact information for your clients. You need to know what happens when you give the debt collectors a bill with a wrong address or phone number.
Are they simply going to ignore that invoice and let it age, uncollected, or are they going to skip trace your client? Skip tracing is the process of finding an old client's new phone number, address or work details, and that service can be invaluable for initiating contact.
2. How do you charge for your services?
You need to know how the debt collectors are going to charge you. Some debt collectors charge a flat rate for their services, but most charge a certain percentage of what they collect. If you hire a company who charges based on what they collect, you need to ask about their past collection successes and failures.
3. What is the average percentage you collect on debts during the first month?
When you hire debt collectors, they may work on collecting your debts for several months. The first month, in most cases, yields the largest percentage of funds collected. During that month, your clients may be surprised by the calls, and they may be prompted to pay.
In subsequent months, clients will still continue to pay as the debt collectors reach them or as the clients get extra money. However, the novelty of the situation wears off, making the first month typically the most lucrative.
Ask what the collection agency collects on average during the first month on most accounts. That number should be expressed in terms of a percentage. For example, if the collectors received a million dollars worth of unpaid invoices and collected $100,000, that would be a 10 percent collection rate for the first month.
4. Do they refer the debts to lawyers?
In cases where clients refuse to work with the debt collector, you need to know what they do. If the client had no money and no assets, it typically isn't worth it to chase them. However, in cases where the debt collector knows that the client has money or assets, you need to know what they do.
Do they elicit the help of lawyers to collect the debts, or do they simply let the client refuse to pay?