3 Questions To Ask A Debt Collection Agency

Debt collection agencies help businesses collect debts from clients who are unwilling to pay or those in bankruptcy. If you wish to hire a debt collection agency, below are a few questions you can use to interview the collection agency. 

What Resources Does Your Agency Have? 

Ideally, the debt collection agency should have highly skilled personnel to collect your debts. Remember, debt collection is a technical process since some of your debtors may not be willing to pay up the debts. Therefore, the company should have experienced negotiators to convince your debtors to pay. In some cases, debt collection could involve a legal process. For instance, if a debtor files for bankruptcy, the collection agency should have a legal team to ensure you get proceeds from the sale of the debtor's estate. In other cases, a debtor might refuse to pay regardless of the agency's efforts. As such, the agency could initiate a legal process such as arbitration using a court-appointed barrister. 

What Procedures Do You Follow When Collecting The Debts? 

The agency should explain how they will collect your debts. Ideally, you need to provide the agency with documentation proving that the other party owes your business debt. They include an engagement contract, purchase orders, invoice, delivery orders, bank documents to prove partial payments and a letter of guarantee. Armed with this documentation, the agency contacts the debtor and initiates negotiations on how they plan to repay the loan. If the debtor does not have adequate funds to repay your loan, the agency creates a loan repayment schedule. It allows the debtor to pay small amounts over an extended period. Usually, the collection agency draws a contract to ensure the debtor abides by the agreement. Should they default on a payment, they could incur a fine. Besides, the agreement gives the agency the right to initiate legal action against the lender. Most agencies have software that automatically updates you when the debtor makes a payment. 

What Is Your Agency's Pricing? 

Most agencies will charge you a commission of the debt collected. However, you should conduct an assessment to establish if the agency will impose extra charges such as court fees. You could be tempted to choose the cheapest agency since you want to recover most of your debt. However, you should examine the agency's history to establish the percentage of debts they have collected for their clients. Online reviews will help you know whether the agency uses illegal means to collect debts and the time the agency takes to collect the debt. The general rule is that you are better off working with an agency with the expertise needed to recover the total amount, even if you incur an extra charge. 

For more information, contact a debt collection agency near you.