If you have been weighing the merits of outsourcing your company’s debt collections, wonder no more. Besides the obvious pros, such as not having to pay a whole other department for the purpose or not having qualified personnel, there are other benefits. By outsourcing to a company that has the necessary expertise, a company ensures its staff can devote time to the tasks they are trained to do. Why have they stressed over collection calls instead?

Now that’s settled, here are the questions you should ask a collection agency before hiring them. After all, if they aren’t the right fit for your business, you’re setting up to fight uphill:

Are they licensed to work in all states, including yours?

Ensuring that a collection agency has the license to function in your state may occur to you more readily. But the next part of this equation is equally important. Firstly, not every agency will be licensed in every state. Secondly, you may need one if, say, your debtor decides to move. Sure, you did business with them originally in your state. However, sending a collection agency where the debtor now resides means they should also be licensed in that state.

Thirdly, if you skip checking the agency’s license, you could get in trouble with the FDCPA. The ensuing legal ramifications would reflect poorly on your business.

Do they employ only certified collectors?

Confirm whether the OCA you want to employ has collection representatives who are both experienced and specialized in handling business-to-business debt. If your debtors are overseas, ensure the agency can manage overseas accounts against them. Only certified collectors will be familiar with the laws regarding compliance issues that control credit and collections. Working with a firm that isn’t well-informed about the principles of everyday business transactions may not be a good idea.

A certification from an accreditation body like the CCLA (Commercial Law League of America) or the IACC (International Association of Commercial Collectors) adds another layer of protection. You can also work with agencies with a CCA of A (Commercial Collections Agencies of America)-certification.

Do they specialize in your industry?

Now that you have confirmed the general licensing and certifications, the next step is industry specialization. Working with a collection agency with experience in your company’s industry has several advantages. Their representatives will function with a working knowledge of its intricacies. This increases your chances of getting paid.

For instance, consumers from certain industries are allowed regulatory protection due to their specific needs. Healthcare would be a good example. In this field, the collection process needs to be handled with finesse since the debtor’s well-being might be at stake.

Then there is the energy-utilities sector. According to the law, individuals are protected from having their services stopped at specific times. In winter, consumers cannot be denied fuel, and the same would be true for air conditioning in summer.

So, during the interview, ask a potential candidate how many clients they have worked for in your industry. Then, determine their recovery rate for those types of clients.

What about an extensive experience?

We have already discussed how experience within the industry matters while hiring a collection agency. Now, let’s look at the overall experience in collections for a potential agency. As a prospective client, you should look for agencies with a strong background. By that, we mean that their executive and senior management has relevant experience of about 15 or more years. They'd be a good find if that experience relates to financial services. However, those with experience in debt collection would be an even better choice.

Remember, collection agencies with such experience will likely be au courant with economic and consumer trends. They will also know more about compliance, collections technology, and data security.

Do they have a Customizable collections process?

When discussing recovery resources, talk to a potential collective agency about how they work. When they go to your debtors, they will put your company's reputation at stake. Therefore, you should pick someone you trust to stay within the Fair Debt Collections Practices Act guidelines.

Begin by asking the agency about their process. Which methods or tactics do they use when collecting debts? Get into the details, such as how they contact a debtor, how often they call them, etc. Then, ask if their collection strategy is specific to your industry. If it isn’t, will they be willing to customize it? And even if it is, can they design it so it is more suitable to your company’s needs. The more appropriate it is to your requirements, the less likely it would result in lost collection efforts.

Wrapping up

A suitable debt collection agency can reduce the time and patience you devote to the challenging work of recovery. But before you hire them, consider these questions during your research. Your reputation as a firm but considerate business is far more important than uncollected debt.