How to maximize the results from your collection agency

We are often asked how a small business or a larger organization can achieve the desired results from using a collection agency.  And while every business is unique and the challenges that got them to need a collection agency are different as well, there are overall must-haves to make your relationship with your collection agency effective.

If you are a small business owner or someone in a leadership position who is tasked with bringing on a new collection agency, treating that agency as a strategic partner rather than a last resort is your first step.

Here’s how you, as a business leader, can strengthen your recovery outcomes with the collection agency you are working with.

Choosing the right debt collection partner

It all starts with choosing a collection agency that is a great fit for your business and industry. Many agencies, including this one, have professionals on staff who have worked in your industry and have intimate knowledge of your challenges. For example, if you’re searching for a collection agency for lawn care companies, or debt collections for veterinarians, you’ll want to know if they understand the way you do business.

You can spend time on their website to see if they fully understand your industry. If you meet with them, ask them the right questions about your business and your frustrations.

You should also understand the fee structure and the person you’re speaking with should be able to articulate that to you in simple terms.

And of course, if you feel comfortable with the people, it’s probably a great fit.

Provide your debt collection agency with clean and organized documentation

The collection agency you’re working with can only be as effective as the information you provide them. That’s why it’s critical to maintain accurate and up-to-date records of your customers’ payment history. The more solid your documentation is, the better chances of recovering your money.

What helps is to deliver anything that helps, including invoices, contracts, letters that outline payment terms, records of communications with your customers, including emails and attempts to collect internally.

It’s also absolutely mission critical that you provide accurate names, addresses, past addresses if you have them, phone numbers and emails.

Referring accounts sooner increase your collection chances

Historically, time is not on your side when it comes to debt collections so it’s important not to waste any of that time sitting on old accounts. The longer the debt remains outstanding, the harder it may be to collect. A good general rule to follow in your small or medium-sized business is to refer accounts after the 60- or 90-day overdue mark. Once your business gets into the habit of doing this, you may see fewer delinquent accounts over time.

Avoid the emotional delay of sending accounts to your collection agency. Don’t let your personal feelings, such as fear of upsetting your customer, interfere with your cash flow. While you want to keep your customer, your main responsibility is the health of your business.

Don’t forget to set internal expectations by aligning your team on how you handle accounts because they may be asked questions. And if you have people working closely with your customers, communicate with them when an account has been placed with your third-party collection agency.

Stay involved with your collection agency

Of course your agency is going to do the heavy lifting from here on in. Still, you must be available because they may require clarification or supporting documentation once they start communicating with your customers. There also be instances of disputes with a bill and you should be ready to respond quickly.

You’ll also want to check your accounts regularly to gauge performance. For example, if an agency has an online portal like we do, you’ll want to check that to see the progress of debt collection efforts.

Our clients use APRweb to do a whole host of tasks associated with collecting money.

Maintain consistent debt collection procedures

If you have a regular need for debt collection activity, you’ll want to maintain consistency in your efforts. That means creating rock-solid internal procedures as well as policies for when you hand off the account to your collection agency. This isn’t something you do once a year.

Using a third-party collection agency is an extension of your overall accounts receivable procedures. And you must treat it so.