Start on the right foot
It is crucial to provide transparency from the very first interaction with a potential agency. Forgetting crucial details about your receivables or what type of services you need can cause issues that may affect your recovery rate. For example, if you a portion of your current bad debt book is deceased or if only a portion of your debt is secured it is best to tell this information upfront, failing to do so wastes time and money for both parties.
Set expectations
If your agency is good they will listen to what your needs are and make recommendations based on what has worked for them in the past. For example if reaching your debtors with an early notice letter or skip tracing certain debtors is a service this particular agency offers, then keep digging. Set rules of engagement for each situation so that you know how and when each agency will handle certain debtors based on age, size and type of debt. It may not make sense to send an early notice letter to older debt or within a certain claim size. Be clear about your expectations and what those services will cost you.
Track their progress
The most important tool any creditor has is the reports that an agency sends periodically. Look for key terms like recovery rate on each report and see how they compare from month to month and year to year.
Accountability
If you are unhappy with the result from a given agency, speak up. This is where having a solid foundation from the beginning comes in huge. If your current agency quoted you a XX% historical recovery rate during their sales process for debt that is similar to yours and they have not gotten you reasonably close to that mark tell them you are looking for more. Enrolling with a collection agency doesn’t mean that everything is now up to them to manage, open up a dialogue and give them time to make adjustments.
Simplify the process
A lot of times what is hurting the recovery rate of a given bad debt book is on the creditor side. Misinformation, delayed information, or changing balances eats up a lot of time on the agency side. Make sure you are sending data efficiently, effectively and follow back up after changes have been made.
Every agency handles the importing of data differently. For some CSV or Excel is fine, while others have online portals that require getting used to. In the end, the process should be simple and easy so that you can delegate or automate these tasks as needed.
If you have a lot of moving parts in your current workflow perhaps a full integration is necessary. Find out if integration is possible with your current agency and how it would work. Integration can be costly on both ends and an ROI analysis should be done to verify if it makes sense.
Tell others about your experience
Agencies are no different than any other businesses; referrals make a huge difference for you and for them. Not only can collection agencies serve as a vital link to new business for you but also your recommendation serves to spread the culture of a good collection agency. Building and sustaining a collection agency that is compliant and meets customer’s demands doesn’t just happen, it takes a great deal of work. Testimonials serve to enlighten the next potential creditor that this agency is legitimate, focused and worth a higher fee. Put simply, the debt management industry has a spectrum of different experience and business ethics levels, therefore a good agency is worth their weight in gold.
Miguel Leman is the Managing partner of recoverity.com, where creditors from any industry can compare rates and industry experience of the nations best collections agencies at no cost.