How Does a Collection Agency Work?

Here are a number of frequently asked questions about how collections agencies work and other questions you might have about getting paid. Contact our team if you have any other questions.

How can I collect a debt from a customer?   

I need a collection agency. Where do I start?       

What should a small business do when they don’t get paid?  

How can I improve the cash flow in my small business?  

What should my business look for when hiring a collection agency? 

What is a professional debt collection agency?

Third–party collection services collect on past – due accounts referred to them by various credit grantors—credit card issuers, banks, car dealers, retail stores, healthcare facilities—any business that extends credit or offers payment installment plans.

What do professional collection agencies do?

Often creditors cannot locate consumers who have moved or changed their phone numbers. The first thing a collection service must do is obtain the consumer’s current address or phone number through a process called skip tracing. The collection office then sends the consumer a notice that allows him or her to dispute the validity of the debt and/or request verification of the debt. Once the notice is received, a collector may call or write to the consumer and ask for full payment of the debt. If payment in full is not possible, the collector helps the consumer make arrangements to solve the problem.

Why are accounts referred for collections?

Most accounts are referred for collection because they have gone unpaid for several months and the creditor has not received communication from the consumer. Third–party collection services, which use specialized phone systems, computers and software designed specifically for the collection industry, often are more effective than creditors at collecting payment on such delinquent accounts.

What is the difference between “in–house” collections and third–party collections?

Third–party collectors are directly regulated by the Fair Debt Collection Practices Act (FDCPA), which is administered by the Federal Trade Commission (FTC). The FDCPA sets forth strict guidelines designed to protect consumers from abusive, misleading and unfair debt collection practices. In–house collectors are credit grantors and are covered by the FDCPA only under certain circumstances.

Is there a typical debtor?

No. People from all walks of life face financial problems. These problems can stem from poor money management and budgeting skills, the loss of a job, prolonged ill health or a multitude of other unforeseen circumstances.

Why do we need collection agencies?

Most accounts are referred for collection because they have gone unpaid for several months. Without the quick actions of collection services, unpaid debt is often reflected by higher consumer prices. Since there is a limit on how high prices can be increased before businesses begin losing customers, bad debt also results in business failure and job loss.

APR’s debt collection solution is a simple, diplomatic collection system that uses a benevolent approach to collecting your accounts receivables. If you want to retain a relationship with your customer, we offer a superior alternative to methods used by traditional Collection Agencies. Call us today to learn more about the APR debt recovery solution. We can make your bad debt collections  easier and more successful. Outsourcing debt collection to APR is the best decision you’ll make this year.

How does APR differ from other collection agencies?

First, we take a much more diplomatic approach. Our goal is to not only get your business paid, but help you to keep the customer. An agency helps keep my customers? Yes it’s true. We act more as an intermediary between you and your customers instead of a last resort. Most traditional collection agencies have one goal get the money collected. At APR we have two goals in mind. Get the money collected and if our client wants to then get them to stick as a client or patient.

Second, we charge a low cost per account instead of charging a large percentage. We have found that some people just simply need a nudge from a 3rd party to resolve their bill. Why pay a high percentage for that? We have a systematic approach that resolves more accounts without them paying through the nose for it.

Third, our clients use us much sooner than they use other agencies. Why? Not because we tell them they have to, because they want to. Most businesses realize that there comes a time when customers start to ignore their internal efforts. Yet, they continue working them internally because they do not want to pay a high percentage with a substantial chance of alienating their customer. With APR, we do not charge a high fee, and we take a more diplomatic approach allowing our clients to use us sooner. Thus saving them internal costs and getting higher recoveries!

Next, customer service!! Yes, many collection companies have poor customer service. If you call with a question, you get the run around, or no answer at all. Unfortunately we hear this from potential clients all of the time. Our clients LOVE the fact that when they call, they speak to a live person, in one of OUR locations dedicated to treating them with respect and getting them the answers they need. We pride ourselves on taking excellent care of our clients, just ask them!!

Let’s not forget reporting! Our clients have access to Real-time reports letting them know the status of accounts and what our results have been. Good, bad or indifferent, you will know exactly what we have done for you!

Lastly, is our acclaimed APRWeb! APRWeb is our client interface that allows you to manage your accounts on-line. You can submit accounts, report activity and pull reports. All from the convenience of your own PC. We developed and continue to upgrade our customized interface based on our clients’ needs.