The decision to hire a collection agency can be difficult. Some business owners fear they will lose customers or create a bad public image. Still others focus on the collection agency fees, and hold onto their aging receivables, not believing that something might be better than nothing.

Thomas Jefferson, who was born on this day in 1743 once said, “In matters of style, swim with the current. In matters of principle, stand like a rock.” Your collection agency should be able to reflect your style when speaking with your customers. As your agent, you want them to treat your customers as you would treat them. Medical debt collection is different that business-to-business, and your agency should be able to adapt their style, while keeping the focus on getting you paid. However, in “matters of principle” your collection agency should always be professional in both their dealings with you and with your customers. Other factors to consider before you hire a collection agency are:

1. Licensing, Bonding and Compliance – Consumer debt collection (debts owed by consumers) is more highly regulated than business-to-business debt collection. Some states require a license and bond, while others do not. All consumer collection is subject to the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FRCA). Medical debt collectors must take care to comply with HIPAA laws. Make certain your collection agency is properly credentialed, and more importantly that they have a plan for complying with State and Federal laws.
2. Research or “Skip Trace” Capabilities – It is estimated that over half of accounts placed for collection need some sort of research to find customers who move or change their phone numbers. Research is also crucial in determining if delinquent customer has assets available to attach if legal action is taken and a judgment is obtained.
3. Credit Reporting – I do not believe that credit reporting does much to get my customers paid, but I acknowledge its place in the process. If credit reporting is important to you, make certain it is available. However, ask your collection agency what other methods they use to collect for you. Do they merely send one letter and slap a mark on a credit report? You want a more consistent, multi-faceted approach to recovering for you.
4. Language Capability – Does your customer base require a collection agency with specific language capability?
5. Experience and Experience – Does the collection agency have experience with companies like yours? Obtain and verify references. Also, what is their training program for debt collectors?
6. Legal Capabilities – Does the collection agency have a relationship with attorneys for cases that may need to be referred for legal action?

At the end of the day though, it is more about style than anything. When you hire a collection agency you should believe you are hiring a valuable partner who not only save you time, but will bring money back into your organization. If you are lucky, your agency might just bring some delinquent customers who make good on their debts back into the fold and assist you with advice on how to minimize the risk of bad debt your business.