News: General News

Questions to Ask When Choosing a Collection Agency

Wednesday, April 17, 2019  
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When needing outside assistance to collect past-due accounts, choosing a collection agency may seem like a daunting task. Sales reps often provide a canned presentation touting a low commission rate and stellar results you have little ability to verify. However, by asking the right questions, you can get essential insight into agencies’ practices and how their work will reflect on your company – factors that should matter just as much as, or more than, commission rate. 

What is the agency’s reputation in your specific industry?
Having experience in your specific industry helps ensure the agency knows how to talk to your customers using their familiar terminology. The agency is representing your company, so the inability to speak about the specifics of the account the correct way can reflect poorly. Look for an agency that has clients in your industry and ask for recovery information specific to those clients. Request references in your industry so you can hear firsthand what similar clients have to say about the agency and its collectors. 

How does the agency protect clients and their funds?
Ask for verification that the agency is licensed and bonded so you know your accounts are covered and that you’re going to get paid even if there are issues. Similarly, ensure the agency has adequate errors and omissions insurance coverage that protects you in the event of an unintentional collector misstep. 

What technologies does the agency use? 
Find out what type of technology is in place for placing accounts with the agency and viewing their status and related notes. Also make sure the agency’s technology can meet your requirements for remitting funds. 

How are collectors trained?
How collectors interact with your customers can either complement your business practices or harm your reputation. Knowing the agency’s internal practices reflect the level of professionalism you expect from your own employees can provide additional peace of mind that your agency is acting in your best interest.

What is the agency’s track record with consumer protection groups and trade associations?
Is the agency a member in good standing of the Better Business Bureau? Is the agency involved with commercial collection trade groups, such as the International Association of Commercial Collectors and Commercial Law League of America? How long has it been involved and to what extent? Frequent, active participation often reflects a commitment to high standards and professionalism. 

What is the agency’s process for collecting?
Meet with agency representatives in person and ask them to walk you through their collection process for different scenarios. How do they handle disputed accounts or avoiders? If they tell a customer their account will be going to legal, what is their actual process? If it’s something they do every day, their response will come naturally. If they don’t have a clear explanation readily available, chances are they don’t have a dependable game plan. If you discover that most of the agency’s successful recoveries come from legal work, it may be a sign the front-end collection efforts are lacking or they are “creaming” your accounts. 

How does the agency’s size affect its ability to collector your accounts?
Large agencies may offer a lower commission rate as a result of their large volume of accounts handled, which may be a benefit for some clients. However, there is much to be said for a more personal, hands-on approach and familiarity available from a smaller agency. If you want the collectors to know who you are, who your clients are, what your expectations are and how you like accounts handled, a smaller agency is more provide the level of service you need. 

Ultimately, the agency you choose represents your business. It should be an extension of what your company’s core beliefs are.Ensuring its management and collectors understand and operate according to your company values is essential. After all, your reputation is at stake. While an agency’s rate is an important consideration, it is far from the most significant factor at play when considering an agency. Take the time to ask the right questions and evaluate what the answers mean for your business. Making the right decision can lead to a long-term, mutually beneficial relationship. Making the wrong decision can result in harm to your company and lost business.

To help members easily identify an agency with high professional and performance standards, NACM North Central has named Commercial Collectors Inc. (CCI) as its preferred collection service provider. 

Having worked with NACM North Central members for many years, CCI has the knowledge and experience needed to provide efficient, effective, service-focused collections to reduce write-offs. To find out how CCI can help you, contact Larry Barthel at or (763) 453-7408, Brian Armstrong at or (763) 453-7403, or visit