Choosing a commercial debt collection agency.(Credit Basics)

There are a number of excellent national and regional agencies out there. Out of respect for those I don't know, I won't name any. The things I look for in a collection agency are these:

1. Performance, performance, performance! Realistically, we all know that by the time we place an account it may very well be (DOA) Dead On Arrival. Nevertheless, you should monitor the performance of the agency or agencies you use.

2. An opportunity to meet face-to-face with a representative of the agency at least quarterly to discuss their performance level, your goals and their collection efforts.

3. Prompt and accurate reporting of the agency's collection efforts, and prompt reporting of all payments received from the debtor.

4. The collection agency should not be reluctant to recommend that the matter be placed in the hands of an attorney if the debtor refuses to work with your agency. The threat of referring an account for suit may be the only way to extract payment from an uncooperative debtor.

Most credit managers receive sales calls from collection agencies on a regular basis. If you are serious about establishing a relationship with a new collection agency, it should be unnecessary to take an adversarial stance when discussing contingent collection fees (or collection rates) with a collection agency because a key element of the credit department's relationship with a collection agency is mutual respect. If that respect is not evident when the collection agency quotes fees (for example, when a collection agency quotes a fee structure rate that is above the going rate) there is little reason to continue the discussion.

When you discuss a relationship with a third patty collection agency, you should: