Press Release: The Compliancy Group
It all begins with you.
Learning how to harness the information a potential collection agency can provide during the interview process is crucial to your bottom line. Terms like placement, recovery rate, fee schedule, get lost in a sea of other facts about a particular agency. It is common for creditors that are new the process to treat the selection of a collection agency like any other service and focus solely on the fee to collect. In reality, your success in recovering money from your debtors with this firm hinges on your ability to see the bigger picture.
Making sense of all of these terms isn’t difficult, but defining which factors matter more is. The biggest misconception is that a potential collection agencies’ fee is the most important piece of information to acquire, in fact it is the opposite.
Here is a quick breakdown of the key terms you need to have a grasp on to get started, in order of importance.
Stop looking at collection agency fee’s and start looking at recovery rate.
Recovery Rate: The key factor for any agency is their “recovery rate”, which is how much you can expect them to collect of your unpaid receivables. The rest of the other factors below are meaningless if your collection agency cannot recover your funds in question. A lot of times it makes sense to pay a higher fee if that means that more money is collected, but of course every situation is different. An agencies recovery rate is also the hardest factor to define because so many factors impact the recovery rate of a given receivable. Age (days past due) and type of the debt (commercial, consumers), placement, location, and experience with particular industry type all impact a recovery rate. Creditors with decades of experience request testimonials to get an idea of what an agency can really do. In order for any agency to provide you with a accurate testimonial they should have a firm understanding of what your receivables really look like to be able to make an “apples to apples” comparison. Be cautious about agencies that boast extremely high recovery rates without understanding what your current book really looks like.
Key collection terms you need to know.
Contingency or Non-Contingency: Most agencies work on a contingency basis. This means that they only charge you a fee if you they collect from your non paying client (debtor). While others charge a fee upfront to collect.
Placement: This term defines how many times collection of the debt has been attempted by another agency. This is outside of the normal terms of the contract that you have within a given client.
Fee Schedule: Understanding the charges you can expect when collection actually occurs is crucial, but again its not everything.
Claim size: The amount of delinquent debt per debtor.
My father once told me “life is about options” and to summarize his wordy anecdote the point is to not limit your options in any way by avoiding to do the simplest things.
So, stop keeping inaccurate books…seriously.
Having 100% accurate books paired with a billing system DOES matter and it with good books you drastically impair your businesses ability to recover these funds from your debtors. Don’t limit the options of your business because there is hidden potential in those unrecovered dollars.
If your accounting system is terrible you need start today to find something better. Every day that records go unkept means money you don’t know you have earned or money you can’t prove you have earned going into a black hole.
Accounting systems aren’t always as pricey as you think and in the long run you are better off paying to know where you stand than flying blind. You are better off keeping your options open because even the best collections solution can’t collect money you don’t know you are owed.
Thanks to the folks at the HBMA (Healthcare Billing and Management Association) for welcoming us as a first time attendee. It is great finding a group of like minded vendors that are committed to improve the day to day business of their clients. We look forward to growing prosperous partnerships with HBMA vendors, members and growing with this exciting organization.
Logan, our son, turns one next month. I wonder if he will enjoy flying as much as I did when I was a child. I am guessing that the days of having a enjoyable flight experience are over. The days when a child gets to meet the pilot, slap on some cool wings and get some real friendly service are slowly dwindling away. This isn’t directed at all airlines (but most) but I used to love flying and now I absolutely dread it. The small seats, the thought of leaving the ground or the large guy next to me on this flight to NYC aren’t the reason that I have lost that “flying” feeling.
Do we really need a safety briefing on ever flight? Is anyone alive anymore that hasn’t used a safety belt? If so, perhaps you can share with them and only them how to use it?
Do we really need to hear from the pilot? Does that re-assure anyone anymore? Who cares what altitude we are at?
Did you really need to wake me again to pitch me for 12 minutes on a miles card?!
It boils down to this. Model the commercial experience after the experience of flying private and your customers will pay more. Airlines, your customers shouldn’t have to buy $100 noise canceling headphones to escape this barrage of sounds and requests. Come up with some creative alternatives so that we don’t have to face that god forsaken circus every flight. Target the outliers not the masses with your over-bearing noise.