So, you have hired a collection agency. What comes next?
You will notice right away that you have more time since you no longer have to chase after delinquent customers. And, you should let the collection agency do their job. Step out of the process. You no longer need to bill customers in collections, and if they contact you, refer them to the agency.
When can you expect some money?
This question is impossible to answer, as it depends entirely on the number of accounts, type of accounts, and complexity of collection involved. What you can expect is periodic updates on the status of your accounts. In fact, before you hire an agency, discuss how and when they will report account progress to you.
Be realistic. You know what you did to collect from our customers before sending them to collections, and you know that debt collection is a process. Some customers will pay soon after being referred to collections, while others will take time.
Remember that a collection agency works on a contingency rate basis, which means they charge no money up front and get paid if (and only if) they collect for you. Just as you have entrusted the debt to the agency, they have put their trust in your business, and the validity of the debts you place with them. It is a leap of faith for both sides.
It is not as much how quickly a collection agency returns money to you, but rather what actions they take and how long they persist in the endeavor. A collection agency works the file for 30 days, slaps the debt on a credit report, and then moves on to the next file will produce limited results.
Once again, ask your agency about their process before you hire them. How are they different?
Have new information? Pass it along!
Research is a big part of debt collection. Over half of collection files will need some sort of research to find new information, such as new phone number or address. The research process is called “skip tracing” and it is ongoing. Collection agencies have access to databases for research but some of the best information comes from social media or “buzz” in the community. If you learn something new, pass it along to your collection agency, even if you are not sure it is significant.
As an example, a customer once told me that she learned, through Facebook, that a customer was expanding his business and hiring new people. The debtor had been telling me business was slow, and I was able to share his own words back to him, and convince him to pay what he owed.
Another time, a customer shared with me that a judgment debtor had a new job. The debtor had promised to pay when he went back to work, and we contacted him and set up a payment plan.
So what can you expect? You can and should expect to have a business partner who respects your business and works hard to get you paid. You should expect a give and take. If you participate in the process and keep the lines of communications open, your collection agency just might exceed your wildest expectations.
