Calling in the Collection Cavalry – How to Get the Most out of Your Collection Agency Relationship

From the Virtual Credit Manager

There will inevitably be a day when you realize your collection efforts are not getting a delinquent customer to pay their bill. Despite all the correspondence, calls, excuses and possibly promises made, there still has been no progress.

What can you do?

The easy answer — refer the customer account to a Collection Agency when all else has failed to get you paid. A Collection Agency will use proven third-party methods to collect. Most agencies also have a network of attorneys who can file a lawsuit in the appropriate court should in house agency collection efforts fail.

Most Commercial Collection Agencies work on a contingency basis, typically charging 15 to 50 percent of the amount collected depending on the age of the receivables, the size of the claim, the volume of business you place if you are a regular client, and their ability to collect on your past claims — you are not charged if they cannot collect. Most agencies charge 25 to 35 percent for claims less than a year old and over a few hundred dollars. In some cases, they may charge a fixed amount for making the effort, especially if the likelihood of collection is small, the claim is small, or the claim is old.  To access the full article please click here