May 1, 2015 | Debt & Financing
It happens. Even the most efficiently run small business can run into delinquent accounts, and be faced with the unpleasant task of trying to collect on past-due accounts.
Most small businesses have their own internal debt collection process, but may need to turn to a professional credit collection agency when additional help is needed. Small business owners need to be careful when selecting collection agencies, as the activities of these firms can sometimes go unmonitored.
When shopping around, look for these five features:
- Good references. Follow through and actually check on given credit references.
- Payment policy. A good rule of thumb is that the collection agency gives the money 30-45 days after receiving it from the debtor.
- Forms and reports. Any documents and forms the collection agency should provide should be given immediately.
Typically, the forms should list, in addition to the creditor’s information, full details on the debtor, including any known reason for non-payment. These documents ensure that an agency properly logs the accounts. Request samples before deciding on an agency.
- Account status reports. An agency should provide account status reports that explain what stage of collection the accounts are in. Examples include partial payment arrangement, settled in full, paid in full, bankruptcy, or litigation recommended. These reports should be sent at least quarterly.
The agency should notify the business whenever a possible settlement is offered by a debtor. It’s also essential that the agency’s authority to settle is clearly understood by both agency and creditor. Business owners should request a sample status before they place any claims for collection.
- Communication with the agency. Business owners should be able to talk with a person when they need to call and discuss their accounts, and not just get a recording or answering machine.
To learn more about how to select a credit agency, call Filler & Associates.