There are over 8,000 collection agencies operating in the U.S. today.
If you need to hire a debt collection agency, make sure you hire the right one.
Here are 5 useful tips for hiring a collection agency that will fit your company’s needs.
1. Do your research.
Make sure you find the right collection agency to fit your company’s needs by shopping around.
Check out a few agencies and see which industries they specialize in and which you feel would be a good fit.
Some agencies work more with small businesses, while some do better with large companies.
2. Verify that the agency is up-to-date on compliances and certifications.
Each state has certain rules for debt collection agencies. It’s important to verify that your agency is up-to-date on the required compliances and certifications for each state.
A few to look for are:
- SSAE18 Type II SOC 1
- PCI DSS
- Health Insurance Portability and Accountability Act (HIPAA)
- Fair Debt Collection Practices Act (FDCPA)
Over half of the country’s collection agencies are not licensed to collect money in all 50 states.
If a consumer knows that a collector is using illegal collection practices, they won’t hesitate to take you to court.
3. See if the agency uses skip tracing.
The best collection agencies use a tactic called skip tracing to track debtors who may have gone under the radar.
They use different databases and research to find the debtor.
4. Compares fees and contingency costs.
Different companies charge different fees for their services. Some agencies charge a flat fee for collecting, which is usually a straight-forward and fairly small fee.
Other companies charge a contingency fee, which is the most common among collection agencies.
This means that if there’s no money collected, there’s no fee.
5. Ask about security.
Collection agencies should have excellent cybersecurity to protect client information and handle online payment securely.
Check on their website and ask about what security measures the company takes to protect private information.
6. Do a trial run.
Some agencies will take anything returned by your first agency as uncollectible and attempt to collect on it.
These accounts are known as 2nd placements.
Ask a few different agencies about doing a test drive to see how well they perform on your 2nd placements, then compare the results.
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Our 2nd placement program is the perfect way to “test drive” our capabilities without disrupting any process you currently have in place.