How do I choose the right collection agency from my small business

If you’re running a small business, unpaid invoices don’t just impact your cash flow, they are draining your time and energy and are a major distraction. And if you’ve reached the tipping point where your internal billing and follow-up procedures are just not working, that’s when bringing in a collection agency that specializes in small business can make a dramatic difference.

It’s important to note that not all collection agencies operate in the same way. Many focus on specific industries, regions and other types of business.

If you need to evaluate how to choose the best small business debt collection agency, we have some tips below to help you make that next decision.

Start with the type of debt your small business is trying to collect

You want to align your business with a collection agency that understands and has expertise in the type of debt you are trying to collect. Not all agencies are created equal, nor do they offer the same services.

If your customers are other businesses, then you’ll want to choose a collection agency that specializes in B2B debt. That often involves larger balances and longer payment cycles. You will want to align yourself with an agency that has experience in handling commercial accounts and negotiating those types of debts.

If your customers are consumers, that requires a different type of communication for people who may be struggling with various financial challenges.

Many collection agencies specialize in both consumer and commercial collections but it’s important to ask the right questions.

How much does it cost to hire a small business collection agency?

There are essentially two methods that collection agencies use to structure their fees.

Contingency-based fees are what many people associate with how collection agencies get paid. In short, you only pay if the agency collects on your behalf.

Flat-fee collection agencies offer your business a lower cost per account, often used in the early stages of delinquency. This is often seen as diplomatic and often settles an account more quickly than your internal systems.

Some collection agencies offer a mix of strategies that can help your small business have a blend of helping settle different types of accounts. That might include honest oversights by consumers or more difficult situations that consumers may be in.

Treating your small business customers with respect is a must have

Every small business works hard to secure and retain customers. The collection agency you choose should understand that while collecting money is a goal, preserving future business is imperative.

You should look for a collection agency that communicates professionally and with respect. They should focus on a resolution to help your small business clients through a tough situation.

And they should genuinely help your customers create a solution to their financial difficulties. When a debt collector helps your small business customer, that reflects well on your reputation as a small business.

Helping your small business save time and valuable internal resources

If you’re hiring a collection agency for your small business, you’re working with them to help you create positive cash flow.

But you also want that agency to make things a little easier for your business. The agency should not create more work for you. Their services should act as an extension of your receivables program and help you save time, and valuable staffing resources.

The right collection agency does this by offering you up to date technology such as a 24/7 online portal. You can enter accounts and track the progress of each account. You get clear reporting on recovery and activity.

They should also provide you with customer service resources. Your small business should be able to speak to someone. And they should provide you with detailed training to ensure you’re able to collect that hard-earned money that is owed to your small business.

Collection agencies that offer industry expertise

Choosing a small business debt collection agency that also has industry expertise is a major consideration. For example, you may need a lawn care debt collection agency, or a collection agency for veterinarian practices.

Ask the collection agency you’re speaking with about their areas of expertise in small business.

Making your decision for a small business debt collection agency

We know your small business wants to recover money and at the end of the day it’s about improving your cash flow. But envision reclaiming your time and reducing stress. The right agency is going to act as an extension of your small business and it will balance collections with persistence with dignity and respect.

If you have been spending way too much time trying to collect money from your small business customers, it’s one of the smartest moves you can make. Hire the right small business debt collection agency.