When your internal collection process has reached its end and the bill remains unpaid, it’s time to turn the process over to a collection agency.
Choosing a collection agency to manage your delinquent accounts can be a tough decision. You want an agency that will represent your office in a professional manner. You want an agency that provides a satisfactory rate of recovery, while not tarnishing your reputation with customers, and that can implement your special requests.
Many companies make the decision to use an agency based solely on price, as if collections is simply a commodity. As with most things in life, you get what you pay for and price should not be the main reason you pick an agency.
Here are the basic services an agency should provide and the qualifications you should seek.
- Ability to send customized notices based on a consumer’s situation.
- Skip-tracing services to locate consumers when they can no longer be reached at the address or telephone numbers that were given to you on the date of service.
- Credit Bureau reporting.
- Attorney services to pursue litigation if needed.
- Account managers to answer your questions.
- Online system access for both debtors and clients.
2. Market Knowledge – Make sure the agency has the skills and knowledge needed to successfully collect on your accounts. For example, healthcare, banking, utilities, finance, and education all have their own compliance regulations, terminology, processes, and nuances regarding collections. These regulations can vary significantly by state, so make sure your agency understands your market and can comply with its unique rules and regulations.
3. Recovery – The recovery rate is very important. When you ask about what the agency expects in terms of a recovery rate, listen carefully. If the sales representative quickly gives you a percentage without asking several questions first, you might want to consider another agency. No two organizations are the same. Client recoveries in the same industry can differ dramatically. This can be due to how accounts receivable are addressed from the beginning of the revenue cycle.
4. Procedures and Policies – It’s important for you to feel comfortable with your collection agency. After all, they are representing your company. Make sure to ask about the following:
- What procedures does the agency use to collect from the moment it begins work on your accounts?
- When does it begin work on an account with letters, phone or other communication methods?
- What do the collection letters say?
- How do they train their employees? What topics are covered in training?
- How do they make sure they’re operating in compliance with the Fair Debt Collection Practices Act (FDCPA), CFPB rules, and other consumer protection laws, which are critical to third-party debt collection agencies?
5. References – What do clients have to say about working with the agency? Try to contact a least two creditors in your industry currently using the agency’s services. Find out if the arrangement is successful and how satisfied clients have been with the services they’ve received.
6. Professional Credentials and Audits
- Does the agency comply with all state licensing and bonding laws, if applicable? If licensing or bonding is not required in your state, find out how long the agency has been in business. Experience is often a good indication of quality.
- Is the agency a member of state or national trade associations, such as ACA International (the Association of Credit and Collection Professionals)? Members of ACA agree to comply with all federal and state laws and regulations, as well as the ethical standards and guidelines established by the association.
- What third-party audits does the agency do? PCI? HIPAA HITRUST? SOC II? Audited financials? Third-party audits provide validated proof that an agency has procedures, safeguards, and checks and balances in place. Nothing can take down a company faster than a data breach.
7. Appropriate Insurance Coverages
Insurance is essential in this industry. Does your collection agency maintain the necessary insurance policies to protect and mitigate against liabilities that may arise, whether accidental or malign incidents?
Especially critical these days is a robust Cyber Liability policy. As the fallout of recent high-profile data breaches illustrates, the importance of security in handling consumer data is paramount to maintaining the trust and goodwill of your consumer base. Also, understand what the appropriate levels of insurance need to be for your business and the agency’s size. One size insurance policies do not fit all. For instance, Cyber Liability insurance policy limits are completely base upon the size of the agency and the amount of data in their system. Many creditors have a certain level of coverage required to “check the box” in their buying process, but they have no idea if the coverage they are requesting is the right amount for the agency. Cyber Insurance works much differently than Errors and Omissions Coverage. Learn the difference, don’t just check the box.
Revco Solutions recognizes that there can be no guarantees against cyber attacks. The threats are many and ever-evolving. This fact makes it even more imperative that you have confidence in the security precautions being deployed at every level of your vendor relationships.
These seven points should get you started on finding a qualified and credible collection agency. Contact us if you have questions about how Revco Solutions can help improve your bottom line.