Paying a lower rates for the same auto insurance is good,but in the collections field, paying too low a rate can hurt you.
Agencies with really low rates and unrealistic recovery rates are only able to do that by picking the low hanging fruit. Typically they will only work the accounts that they feel they have the highest chance of collecting without doing a lot of work. Agencies that work hard on ALL your accounts, and help with Asset Recovery on the more difficult ones, will have a higher commission rate, but you will actually recover more money in total (see our comparison example below). The truth is that a professional collection agency will usually send you a larger check each month than a bottom-rate agency, and will also provide you with additional services that lessen your account management workload.
Conversely a bottom rung agency with super low rates will only work the accounts that they can collect quickly and easily from so all the other ones will be ignored or written off from the very beginning.
Agencies such as these advertise great recovery percentages – around 40% to 50%. However, these recovery percentages are computed by using only active accounts. All accounts marked closed, uncollectable, returned, unable to locate, and a few similar categories are being omitted when they calculate their recovery percentages. This is a very deceptive practice, but is easy to detect. To find the real collected percentage just divide the actual collected funds you’ve received from an agency by the total dollar amount of the accounts that you send over to an agency.