If you think collection agencies are not effective at recovering debt, you’re working with the wrong one. And it’s probably hurting your business.
Sadly, it’s not an uncommon problem, and too many businesses simply give up, unaware their collection agency is just plain underperforming. You can fix it, if you know how.
Most debt collection agencies, including mine, are paid on a contingency basis. If we don’t collect, we don’t get paid. Sounds perfect on the surface, but there is a potential downside: many agencies tend to focus on the low-hanging fruit, and neglect the rest. It’s unfair to the client, because the collection agency is tying up your accounts and allowing them to become less recoverable over time. They’re cherry-picking, at the expense of your hard-earned receivables.
A good collection agency should be quick to recover all valid accounts you submit, and consistently achieve a very high recovery rate for you. With so much at stake, you owe it to your business to perform due diligence, and be sure you’re getting the performance you deserve, not throwing good money out the door.
It’s not complicated. Here is how to get started:
Test Your Collection Agency
There is nothing unethical about working with more than one agency at a time. In fact, some of our consumer debt collection clients (as in Canada’s biggest telcos) measure our performance against our top competitors on an ongoing basis. It’s a point of pride that we consistently gain market share, which provides us some leverage in earning contract renewals. By measuring your own collection agency against others, you can see comparative success rates and the differences in business practices.
Grade Your Collection Agency On:
1) Recovery Rate: Look at not only the percentage of debts recovered, but average Net Back. If your agency is focusing only on larger debts because of better commissions or the easiest ones to collect, you are losing out in the bigger picture. Take a close look at all your accounts to see if certain profiles are being neglected. Compare your overall Net Back, which is the most important metric.
2) Complaints (and How They Are Handled): A standout benefit of working with MetCredit is how many of our clients experience customers returning to do business again after the collection process, except with markedly improved paying habits. It’s not a coincidence. We stand out in our industry by respecting the individual at all times, negotiating as equals and seeking to educate clients and their customers. Debtors can be under a lot of stress, and complaints sometimes happen. It’s how those issues are resolved, or not, that has a lasting impact on your brand.
3) Client Service: How does your collection agency interact with and report to you? It’s reasonable to expect high levels of client service and accountability. Too often collection agencies become complacent and fail to provide reliable service, which should include timely reports and quick responses to telephone or email requests. If you do not feel appreciated and treated with care and professionalism, take your business to an agency that values you appropriately.
Don’t be afraid to pay your collection agency a visit.
In fact, do it unannounced.
At MetCredit, we have an Open Door Policy. It’s not as standard to the industry as you might think. We invite clients and prospects to come into any of our Vancouver, Edmonton, Montréal or Ontario collection agency offices, meet our team, see how we operate and where we work. Watch our expert collectors in action to see how we leverage technology and expertise in contacting and negotiation with debtors.
Collection agencies are professional financial services providers. Our role is to work as an extension of your business, making you more effective and more profitable.
You deserve to find the right match, and to quickly collect the money you’ve earned. It should be a productive, enjoyable relationship that complements your billing and Accounts Receivable processes. Don’t accept anything less.
Feel free to call me at 780-420-2377 with any questions, or message me on Linkedin.
For other debt collection advice that will make an immediate positive impact on your business, download our popular tipsheet by clicking the button below.