The collections industry can get a bad rap in the news sometimes. As with most things, however, the bad news is usually attributable to a few bad apples, rather than the status quo. Collection agencies fill an important and necessary role in all sorts of industries - the trick is to find a collection agency that works for you. Click below to read the top three questions to ask yourself when you’re searching for the right partner in debt collection.
Will this agency represent my company well? No matter the industry, you want to ensure that you’re partnered with other businesses that are professional and reputable. Equally important is finding an agency that will do credit to the relationship you’ve built with your existing clients. This is incredibly important, especially in fields like medicine (where there is a patient-provider relationship) and insurance (where companies are competing for consumers). A collections company that understands the importance of preserving your own business relationships is a good indicator that they’ll be great partners.
Does this agency comply with the proper laws and regulations? Just as there are many types of debts, there are many rules governing how those debts are collected. Chief among them is the Federal Debt Collection Practices Act (FDCPA), which is the overarching piece of legislation that all collection agencies ought to be following. The Health Insurance Portability and Accountability Act (HIPAA), and the privacy section specifically, applies for all collections that are related to the healthcare industry (read here for other ways that medical debts are different). The Telephone Consumer Protection Act, regulated by the FCC, applies if telephones and other mobile devices will be used to contact individuals. A key takeaway when considering compliance is that you want a company that is well-versed and a subject matter expert - not just paying lip service to the regulations.
Is their pricing schedule cost-effective? Most collection agencies work on a percentage basis, which means they are only paid for revenue that is actually collected. When these incentives are aligned, it is a win-win situation. The agency is interested in keeping you happy and getting paid, and you benefit from additional revenue collected, while improving your personnel resources and time management. There is a certain point at which it is no longer profitable to continue paying your employees to track down old accounts - these employees cost money, time, training, and office space. Conversely, sending debts to a collection company allows the experts to take over, and frees up your personnel to focus on their primary tasks.
It’s important to pick the right partner when you’re selecting a collection agency. One of the most critical components is making sure you choose a company that can preserve the relationships you’ve worked so hard on. A second consideration is regulatory compliance - you don’t want anyone associated with your company to show up in debt collection horror stories. The last major consideration is the financial aspect - is it worth the time and effort for your employees to continually track down old debts outstanding? With these three questions in mind, you’re now better prepared to make the right decision.
