Collection Basics

Collection Basics

Most people cringe when they hear the words, collection agency. If you are the person who owes money on an unpaid debt, you probably aren’t too thrilled to receive a phone call from one. However, if you are the creditor trying to collect on what is owed to you, a collection agency can become a valuable alliance.

Whether you are a company dealing with business to business collections, or you simply are trying to recover debt from one customer who bounced a check, a reputable agency can help you with this battle. There are hundreds of collection agencies out there, so doing a little research can go a long way.

Time Is of the Essence

Successful debt collection begins with immediate action. It is never a good idea to wait more than 90 days to begin trying to recover debt on past-due accounts. This is where a good collection agency comes into play.

The agency will immediately begin communications with your debtor through phone calls and mailed letters. If they are unable to connect with your debtor after several attempts, they may refer your case to a collections attorney. The collections attorney will almost always be able to collect from your debtor, as most people fear legal action. Once the debt is recovered, the only thing left to do is pay the agency the fee that was agreed upon at the date of hire.

Understanding Collection Agency Rates

If you are a business owner trying to collect on past-due accounts, a reputable collection agency can often help. However, it would be wise to conduct a little research before selecting one. Collection agency rates vary, sometimes significantly.

In general, the longer a debt has remained past-due, the harder it is to collect it. Therefore, the fee you pay out to the debt collection agency will be higher.

How Much Did You Say?

It is plausible that collection agency rates can reach as high as 50 percent. One agency might charge 35 percent for accounts 90 days past due, while another will charge 50 percent to work on an account with the same status. Fees also vary according to the amount owed, length of time overdue, as well as previous handling by another agency.

You may find it amazing that collection agency rates can reach upwards of 50 percent. You have to decide if the amount past-due warrants the time and money you will spend trying to recover delinquent debts. In many cases, the satisfaction from collecting what is rightfully yours, balances out the fee paid to an agency.

Debt Collection Basics

The very nature of debt collection calls for aggressive planning. Businesses lose hundreds of thousands of dollars a year due to delinquent accounts. More often than not, a third party, such as a nationwide collection agency, needs to be brought in to recover lost revenue.

When a client falls behind on payments, whether it be one person or a huge corporation, the ability to collect decreases as time passes. Often times in-house accounts receivable offices cannot handle the enormous volume of past-due accounts. This is debt collection at its worst.

There Is Help

This is where a reputable collection agency comes into play. They can help ease the heavy burden of debt collection, by aggressively contacting your debtor. This is usually done by placing numerous phone calls, and sending out letters regarding their delinquent status.

These agencies have high-tech computer systems that can trace people who have disconnected their phones or changed their address. If they are still unable to collect after these efforts, a collections attorney is usually asked to take on the case. More times than not, an attorney can recover funds as the debtor does not want any legal suit brought against him or her.

Debt Management and Your Business

Debt management is an issue that most business owners would rather not have to deal with on a daily basis. However, it should be a top priority, as delinquent accounts cost business owners thousands of dollars every year. It is imperative to have an accounts receivable management office that is fully capable of handling these past-due accounts.

Unfortunately, many businesses’ accounts receivable offices simply cannot handle this demand. It then becomes necessary to hire a reputable collection agency that will handle all of your debt management needs. This agency will work for you to collect money on your behalf from clients with past-due accounts.

Getting Back What Is Yours

You will work closely with the agency that you have chosen to handle debt management for your business. They will be aggressive in their efforts to get back what is owed to you. Oftentimes, they have dial-up computer systems that allow you to log on and check their progress.

The agency should always keep you in the loop regarding the status of the accounts being assessed. If and when they have recovered money from your debtors, you should be notified immediately of this change in account status. If it is to your satisfaction, the last step it to pay the agency the previously agreed upon fee, which is a percentage of the total amount collected.

Finding a Nationwide Collection Agency

Are you tired and discouraged from fighting the constant battle of debt collection? Does it seem like your in-house accounts receivable management office cannot keep up with the demand? Or have you been unable to collect on accounts despite all efforts. It may be time to find a good nationwide collection agency.

Make sure that the agency you select provides the following:

1) National credit reporting

2) Location and skip tracing (included in commission)

3) They are bonded and insured (for their protection and yours)

4) They are members in good standing with the ACA and any state Collection Association.

5) Monthly status reports.

6) Provide compete account management services.

7) Provide reports on accounts that are closed (bankruptcies, deaths)

Winning the Debt Recovery Game

Navigating through the turbulent waters of debt recovery can be confusing and stressful. Your business’s bottom line will be affected negatively if a stop to delinquent accounts isn’t mandated. Sometimes it is necessary to enlist the professional help of a collection agency who specializes in debt collection.

Business owners lose thousands of dollars each year due to customers not paying on their accounts. In fact, there have been some estimates that this figure is closer to one billion dollars annually for domestic businesses. Debt recovery is a national issue that ultimately affects everyone, from business owner to customer.

How Professional Agencies Can Help

If after many attempts to collect on overdue accounts, you are still losing at the debt recovery game, it may be time to enlist the help of a collection agency. They can take on the difficult challenge of tracking down your debtors. This is often the first hurdle that requires attention.

Once contact has been made, the collection agency will attempt to secure payment-in-full on your behalf. If the debtor cannot pay the full amount, a payment plan may be put into place. Of course, the final decision is always authorized by you, the creditor.

Progressive Asset Management

It is vital to the health of any company, large or small, to make asset management a top priority. Just as it is important to keep tabs on all of your debt recovery issues, it is also imperative to make wise investments. Balancing out debt management with asset management allows your company to grow.

Asset management is often a confusing subject for individuals and big businesses alike. It is often difficult to figure out which investments make the most sense for your specific situation. A strategic plan can help you to reach all of your financial goals.

In-House Accounts Receivable Management

Quite often, a company’s accounts receivable management office is not equipped with the necessary tools to keep abreast of all delinquent accounts. More often than not, these offices become overwhelmed with the magnitude of this debt collection problem. There are not enough resources at their fingertips to keep these accounts in check.

As a result, past-due accounts get swept under the rug, and the problem of debt recovery grows ever bigger. This is a gargantuan struggle for businesses who are trying to grow their profits and minimize their out-of-pocket expenses. Usually, it becomes necessary to enlist the aid of an outside collection agency who can work diligently to collect money on all past due accounts.

Where to Turn

When your in-house accounts receivable management office is just unable to keep up with the enormous workload involving delinquent accounts, a good course of action is to find a reputable collection agency.

The internet provides a wealth of information at your fingertips. You can research agencies, compare their fees, and decide what services are right for you. So if your accounts receivable management office just can’t keep up with the workload, then consider using a collection agency who can help ease the burden.

Tackling the Issue of Business to Business Collections

The task of debt recovery is never an easy or pleasant one. It is often a thorn in the side of many business owners who are struggling to make financial headway. Business to business collections are often best left in the hands of trained professionals, who understand the taxing process of debt collection.

Many companies simply cannot keep on top of the continuous barrage of delinquent accounts. It is not possible for their accounts receivable office to track down every late paying customer, let alone collect money from them. When your business to business collections impede your company’s financial progress, it may be time to find an agency that can assist you with your debt collection needs.

Starting at Square One

There are many reputable collection agencies out there that specialize in business to business collections. They are trained to deal with corporations, big and small. These collection agencies have strategic plans that can improve your chances at recovering debt from all of your delinquent customers.

If you can obtain a referral or two from trusted associates, this will make your search that much easier. However, many businesses employ collection agencies after doing some research on their own. Once you have found an agency that can meet your specific needs, you will start at square one to put a plan into action that results in recovering monies owed to you.

Bank Account Search Info

Sometimes a debtor will claim that they are unable to pay on their delinquent debts. This could include business to business collection issues, or private citizens who have been past customers. Regardless of who the debtor is, it is often necessary to do a bank account search of the person in question in order to determine assets. Debt recovery is a very tedious process that is aggressive in nature. Many times overdue accounts get reported too late, and the process of collecting on these accounts becomes prolonged. Often enough, a case will go to court for collection, and a judge will put a judgment into effect.

Collecting from Your Debtors

Unfortunately, some debtors who have judgments against them, will still not pay up. It then becomes necessary to do a thorough check of all their assets, including a bank account search. Professional agencies can do research on the debtor, and find out where their assets are hidden, and how much income they are generating.

They can then pass that information onto you, as well as the attorney handling the case. If assets are found during the bank account search, there are steps to take in order to collect on the previous judgment. The collection agency and the attorney you are working with should be able to tell you the best course of action to collect once assets have been identified.

What to Look for in a Commercial Collection Agency

If you are a company that needs some assistance with your business to business collection issues, there are some guidelines that will help you choose a commercial collection agency wisely? There are literally hundreds of collection agencies out there who advertise themselves as reputable and professional. However, many agencies are not very professional and are only looking out for their bottom-line, not yours.

When you are researching a commercial collection agency, a good idea is to check if they are a member of the Commercial Collection Agency Association (CCAA), which is part of the Commercial Law League of America. This association was established in 1972 to improve the quality and reputation of the commercial collection industry.

The ACA and You

Using an agency that is a member of the ACA will ensure you quality service and fair treatment. The central focus of an ACA agency is you, the credit grantor. You can count on persistent collection efforts coupled with ethical treatment of your past due customers.

Membership agencies of the ACA are certified by the American Collection Agency of America, and they continue to meet the ACA strict criteria. You can check to see if an agency is a member of the ACA by logging onto their website and browsing their member directory. If the agency you are researching is not listed, they are not a member. It would behoove you to use a member agency if possible, as they possess the CCAA’s strong work ethic.

Judgment Enforcement 101

It is estimated that almost 80 percent of all judgments are never recovered. A court may have awarded you a judgment, but it entirely up to you to enforce that decision. This is often a difficult situation that needs the attention of an agency that specifically deals with judgment enforcement and debt recovery.

If the court has ordered your debtor to pay up, but they still refuse to do so, you will need a new plan of attack. Judgment enforcement agencies have high tech systems that allow them access to your debtor’s personal information. This allows them to locate any assets that he or she may have.

Steps to Debt Collection.

Once a judgment enforcement agency locates assets or other sources of income, they will try to collect from your debtor. This means that they can garish wages, attach bank accounts, and seize assets as necessary. All of these steps can be taken within the boundaries of the law.

When possible, the agency will use any of the above tactics without prior notification or confrontation with your debtor. In a nutshell, the agency will enforce the judgment that was legally and rightfully awarded to you by the court. This is the goal of every professional judgment enforcement agency.

Asset Recovery and Debt Collection

When a customer is past due on an account, the more time passes, the less likely you will be to recover that debt. Debt collection is a very tricky game that you often must play with your customers when you run a business. Look at it this way; asset recovery is a piece of the debt collection pie.

If you find your accounts receivable office buckling under the strain of the debt collection process, it may be beneficial to enlist the help of a professional collection agency. Not only will they aggressively go after your debtor with phone calls and mailed letters, they often have the high-tech ability to locate additional sources of income and/or assets. When this is discovered, asset recovery is the next step in the debt collection ladder.

What Are Your Options?

After you have exhausted all of your resources to collect from your customers but to no avail, the next step might be to go to court and sue them for the owed amount. A collection attorney will guide you through this legal process. More than likely the court will award you a judgment, which will be up to you to enforce.

Unfortunately, this isn’t very easy. A good agency will locate your debtor’s assets and any additional income that can be seized to fulfill the judgment. Asset recovery is never an simple business. However, with the proper help and a strong strategy, it is not impossible.

What Comes First?

Which debt recovery services you use really depends on your specific needs. If you have too many accounts past due and your in-house accounts receivable office can’t keep up, then a standard collection agency can help. However, if you are dealing with business customers who are past due on large sums of money, over a longer period of time, you may need to refine your search to agencies that have numerous high-tech resources.

These agencies offer debt recovery services that run the gamut. They offer skip tracing, asset recovery, judgment enforcement, and they collaborate with collections attorneys. It is important to keep in mind what your specific needs are in order to obtain the best services to fulfill those needs.

Debt Collection Agencies Are Not All the Same

Not all debt collection agencies are the same. Every agency offers specific services at different rates. It is up to you, the credit grantor, to find the piece that fits into your puzzle.

The task of debt recovery is often a daunting one. Many business owners struggle to keep past due accounts in check, and simply don’t have the time or resources to do so. It often becomes absolutely necessary to utilize the services of outside debt collection agencies.

The Benefits of a National Collection Agency

Debt recovery is really just a game of cat and mouse. The credit grantor makes some polite phone calls in the beginning, usually with the promise from the debtor that payment will be made promptly. It rarely works this easily.

To the dismay of many business owners, debt collection is a full-time job in and of itself. Unfortunately, many businesses cannot keep up with the workload of collecting on delinquent accounts. It then becomes a necessity to contract out with a national collection agency.

Playing the Game

As stated above, the process of debt collection can truly seem like a game of cat and mouse. A national collection agency often has the latest technology at their fingertips which drops the stress level down a few notches for the credit grantor. The business owner can provide all the pertinent information, and the agency can get to work making phone calls, sending out letters, and if necessary, doing bank account searches and asset recovery.

More than likely, a reputable, national collection agency will have collections attorneys that they work with if that becomes a plan of action. Debtors usually do not want to get involved in any legal action, and will work with the agency and the attorney to settle the debt. In the end, you will be able to collect on your past due accounts, and generate some satisfaction in knowing you won the game this time around!


It is important that when that an agency is able to accommodate your needs. Some agencies have a standard collection process that consists of a series of phone calls and letters. The more professional agency will provide you with choices in the type of program that would benefit your specific needs. Which could include pre-collection services and legal options for larger balance accounts?

Understanding the collection process is the key to working with a collection agency. Your collection agency should provide you with all the necessary information to assist you in your account receivable management, also to make an informed decision and act as an extension of your office.