When To Use a Debt Collection Agency


Debt Collection Agencies have a bad reputation as a result of a very small group of unprofessional collectors in an otherwise hard working industry.  As a small to medium sized business, you should have a solid working relationship with a quality debt collection agency.  They  should be fully integrated into your collection process.


1. Send accounts over 90 days to the debt collection agency.

The longer a debt goes without paying the less likely it is that it will ever be paid.   Take immediate action once your debt turns 90 days.  The longer you wait, the less likely you are to collect.

2.  Only a Licensed Agency

You are trusting a debt collection agency with your customers, and ideally, you will keep the customer long term, if your debt collection agency manages the process professionally.  Be sure that your debt collection agency choice is licensed.


3.  Do your Home Work.

Debt collection is not a generic service.  Success rates vary greatly,  There are an incredible array of “consumer rights” laws that a debt collection agency might violate, that could not only void the debt, but land you in hot water.   Get to know your agency, meet them, make sure your business ethics align, see their track record.

4.  CCAA Certified.

The Commercial Collection Agency Association is a great starting point.  Not all collectors need to join.  The fact that they have joined the CCAA shows that they have taken the extra step in professionalism.

5.  Do they have some “legs” under them.

There is nothing wrong with a startup collection agency, we were all startups at one time.   the collection industry is predominantly very hard working and ethical, but there are predatory collectors out there that can cause more harm than good.  If the collection agency has history they are  much more likely to be the former, not the latter.

6.  Know how quickly the debt collection agency rolls funds back to you.

Cash Flow is the lifeblood of SMB, know how long your collection agency holds on to the funds they have collected before they send that payment to you.

7.  Make sure they are good communicators.

Have a clear understanding between you and your debt collection agency regarding the frequency of communication between you and then.   If accounts get stale due to non collection, and you are not aware, you may miss the time to effectively escalate from debt collection agency to debt collection attorney.  Know who you are dealing with, have an actual real person to speak to, in addition to whatever electronic portal they might offer, and an agreement on an update schedule.

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