Yield Higher Revenue with Debt Collection Agencies

the debt collection industry is glorious, yet it is one that is relevant and necessary in even the most simple business practices. On average, more than $40 billion dollars in bad debt is recovered annually by over 6,500 debt collection agencies in the US. More shockingly, this amount represents approximately only 2% of total consumer debt incurred each year. According to a recent survey, “collection of these debts saved the average American family $354 that would otherwise have been spent on the same goods and services due to higher rates charged by businesses to cover the cost of unpaid debts. ” 1 Based on these statistics, it is easy to see the need for and understand the value of the debt recovery and collection industry. Many collection agencies utilize the model of retaining a percentage of the debt they collect in return for their services. This pricing model allows creditors the ability to place unpaid accounts with little to no risk of losing additional revenue. Risks associated with using a debt collection agency may include a negative impact to your business reputation, consumer complaints, or complicated statements to review when payments are collected. While many agencies pride themselves on collecting the “most payments” they often do not consider the pride or reputation of their client
when speaking with debtors. It is important when selecting a debt collection agency that you follow a simple checklist such as the following, to ensure the agency is truly an extension of your business model:

1. Ask the prospective collection agency if they specialize in a specific industry, such as medical debts, student loans, government, etc. It is important to select an agency that understands your industry.
2. Find out how quickly the agency will begin to “work” your debtor’s accounts once placed. Agencies who have embraced technology should be able to work your accounts within a few days of placement.
3. Review collection charges and request a sample report prior to placing accounts to ensure you are able to understand and interpret the reporting procedures. Confusing reports will only frustrate you, so make sure you are comfortable with their reports and reporting methods.
4. Ask for references of current clients to find out what the agency’s customer service is like. A good collection agency will provide you quick service and simple reports via a secure website or upon request.

Finally, remember that no matter how unpleasant
the concept of debt collection, these companies are
saving all of us hundreds of dollars every year!

1 (2008. Value of Third-Party Debt Collection to the U.S. Economy in 2007: Survey and Analysis, PricewaterhouseCoopers)