“What’s in a name? A rose by any other name would smell as sweet”

                            – William Shakespeare, Romeo & Juliet

Many things are not what they seem on the surface. Debt collection agency fees are certainly not all the same. Business owners must look carefully and see what’s in a rate, (and more importantly, what is not) before hiring a collection agency. Years ago, our client learned this lesson the hard way.

     Years ago, our client, a well respected local fuel oil company, called to tell us that although they loved the results and service they received from us, they were going to switch to another collection agency that was offering them a very attractive per file fee. She shared with me that they had paid for the right to place 100 files with the agency. There was no guarantee of any result on the files submitted, and no refund if the agency’s results were unsuccessful

We continued to work the old files we had, and kept sending them checks every month. After six months, we checked in with the client to see how the new agency was doing. Our client told us that they had recieved a few payments, and had submitted about 50 accounts, or half the number they had prepaid.

Two weeks later, the client called us and told us that they were not going to send any more accounts to the new agency, and asked us to take them back. As it turns out, the flat per file fee only covered the cost of one letter and a few automated phone calls. The agency had sent back most of their files, saying that they were uncollectible. They did offer another service which was very expensive and made no economic sense to the client.

In the meantime, their delinquent accounts were even more delinquent, and they were concerned that the delay in time wasted would make the money even more difficult to recover, as the accounts were now aged over a year.  

So if it looks too good to be true, it usually is. Look at results, as the money put back into your business is the only way to measure the success of your collection agency.      

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