It would help if you made every effort as a small business to maximize your profits. Therefore, it’s critical to take action to recover that money when a client fails to pay what they owe. The best way to guarantee that your business is paid is with the help of debt collection companies. But how do you pick the most suitable debt collection company for your small company?
You want a collection agency for small businesses that recovers the largest amount of debt owed to you, but you also want one that is open and honest about its methods and fees and presents itself favorably to your clients. These are the factors to be considered when hiring a debt collection agency for your small business.
Both Size and Location
Small local agencies to sizable multinational corporations make up the spectrum of collection agencies. No one size fits all. Your OCA (Outside Collection Agency)’s scope and size should be comparable to your business’s. A collection agency for small businesses with strong local connections can manage your accounts effectively if you run a small business that offers products or services in your city or area. Conversely, if you sell nationally or internationally, look for an agency with contacts and industry knowledge within the United States and the nations where you conduct business.
Standards and Integrity
Choose a collection agency for small business that values integrity and complies with high standards of customer relations if you want to keep doing business with your customer after the bad debt is paid off. Your company will be directly impacted by how the OCA treats your customer during collections. A company that has a bad reputation for using unethical collection tactics and treating customers impolitely quickly gains popularity. They might not only harm your relationships with current customers in the future, but they might also cost you new clients.
Both Legal and Financial Positions
Strength isn’t always correlated with size. Smaller to mid-sized organizations may be more financially secure than big, publicly traded companies. Examine the agency’s finances to see if any problems prevent it from paying you once it has been collected.
Many states require collection agencies to hold a license to collect within a state. Almost all states require licensing for consumer agencies, and some do so for commercial agencies. Ensure your chosen agency has the appropriate licenses, particularly in the states where your debtors reside. As required by law, they should also be properly insured and bonded.
Your Customer Base
The collection agency for small business you choose should have experience working with your target market. A commercial agency for business-to-business (B2B) accounts; a consumer agency for individual or consumer claims. If your portfolio is mixed, you should divide it. In this manner, you’ll be able to make the best use possible of your collection partners’ experience. Another option is finding a business with substantial experience in consumer and commercial collections or one with experience in your company’s sector.
Across industries, the collection procedure is essentially the same. The cost of collecting from an importer versus a distributor or retailer is not significantly different. There are, however, special regulatory requirements in some sectors, including the media, healthcare, and telecommunications. When handling your past due accounts, collectors who work in those areas must be experts at applying these regulations. Additionally, a substantial body of federal and state law applies to consumer collection. Find a collection partner with the necessary expertise and experience if your industry or clientele is subject to rules and regulations.
You should anticipate that your collection agency for small business will provide some online access that enables you to view the status of your accounts, communicate with their collectors, and possibly even run statistical reports on your collection portfolio, given the level and accessibility of technology today. It might be fine if you only file a few claims each year if the collectors keep you informed about the progress of every account. However, you should use a company that offers web access to this data if you have hundreds or thousands of accounts. Ad hoc and customized report capabilities should also be taken into consideration.