Selection of a Service

Before selecting a commercial collection service, a creditor should review certain essential factors. There will be a financial relationship between a credit grantor and the collector, and the collector has ethical and legal responsibilities.

The credit grantor should:

  • Investigate the commercial service’s financial responsibility and position in the community.
  • Check on the bonding and licensing of the service, particularly if required by state law. IACC requires that its members be bonded.
  • Be sure the service is aware of federal and state collection laws and follows good business practices.
    • IACC members have access to individual collector and agency certification programs. Certification assures clients of the knowledge and professionalism of the agency’s service.
  • Determine the relationship of the service with its peers and competitors. IACC sets the highest standards for its members and demands strict compliance with its rules of conduct and its code of ethics.
  • Know how the service approaches the customer. An effective service will understand the client’s credit and public relations policies and provide a collection approach that complements these policies.
  • Learn the geographic or trade strength of the service.
  • Find out first-hand what area it covers and if it has access to fellow collectors throughout your market area in order to give your claims on-the-spot coverage.
  • Find out how far the service will proceed on typical cases.
  • Learn how it recommends continuation with attorneys and forwarders, if necessary.
  • Determine how fees are charged and obtain a schedule in writing.  A collection service often uses a written
    agreement that establishes the relationship with the client, but it works on a contingent fee basis.  Be sure that special situations are understood in advance.

Select a collection service as you would any other firm with which you have business relationships—by reputation and
by performance. You will find members of IACC highly qualified in both areas.

Collection Reports

Fully understand the service’s reporting practices and policies for money remittance. You know you have made a wise choice of a collector by the type of report you receive.  You want to know if a payment has been made and that a check is forthcoming. You are interested in the collection potential from the debtor and the recommendations of the collector.

Reports are essential to the credit manager as you have an obligation to keep others informed, namely the controller, the treasurer, the vice president of sales, the president and the stockholders.  The decision of a creditor company to borrow or to liquidate its assets may hinge on the collectibility of overdue accounts. It may also be a crucial factor in the sales department’s proposals for growth.

Modern business conditions require that management be aware of accounts receivable fluidity.  Specify when reports are required. A good collection service will tailor its reports to meet your schedules, if possible.  Know what types of reports will be used—check-list forms with added comments or special reports which give information of special value. For example, if the debtor moves, changes its trade style or accepts new people into its business, this information is valuable to you.

Communicate with Your Collector

Once you have selected a collection service, communicate effectively with its staff. This creates rapport, confidence and understanding. It encourages cooperation which results in prompt collections.  Supply the service with all background information,
ledger experience, debtor’s business organization and information on the principals. This gives the collector an informed approach to the debtor, thereby enabling them to do a better job for you.




This series of articles come from a fantastic publication published by the IACC  (International Association of Credit Collectors).   It is well grounded and fundamental advise that should be ready by any professional involved in credit collections.

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