Every business has a need for third party collections at some point. The need may not be big, but it will exist at some point. The third party collections process means that your business uses an outside collections agency to contact delinquent account holders and attempt to collect on the outstanding balance. The third party agency will identify themselves as a collections agency as opposed to stating that they’re a member of your team. When someone from your business contacts delinquent account holders, it’s known as first party collections. If you plan to hire a third party collections agency, make sure that they follow these 4 best practices.
The third party collections agency should hold the appropriate licenses. We use the plural because if you have clients in different states who are past due, the third party agency would need a license in each state to collect in those states.
Follows Federal and State Collection Laws
There are federal and state collection laws. The third party debt collection agency that you choose should have a track record of abiding by the Fair Debt Collection Practices Act, Telephone Consumer Protection Act, and state laws. How would you know? First, check with the Attorney General of the State where the collections effort will take place. When third party debt collectors break the law, consumers are encouraged to report them to the Attorney General. You should also check with the BBB and do a basic Internet search to look for what others say about them. This is important because even if the third party collections agency identifies themselves as such, they’ll still say why they’re calling (to collect on your debt) and that can lead default account holders thinking that you’re responsible for the actions of the collections agency. You don’t want your business associated with a company who breaks the law or who has a bad reputation with consumers.
Ability to Provide Verification of Debt
When consumers are involved in the collections process, they have the right to request verification of the debt. If they do, they must be provided with documents that prove they owe your business money. Sometimes, third party collections agencies have a hard time providing that verification of debt. When you choose a third party collections agency, make sure that you understand their process for providing verification. Do you provide that documentation upfront when an account enters the collections process? Will you be contacted when verification needs to be provided?
An Easy to Understand Pricing Plan
The third party debt collection agency you choose should have a pricing plan that is easy for you to understand. You don’t want to be surprised with unexpected fees or charges. Does the agency charge a contingency fee based on the amount collected? Are you paying a flat monthly rate? Make sure that you understand the pricing plan.
Looking for a Third Party Collections Agency for Your Business? Consider Clients ARM
If you’re looking to hire a third party collections agency to handle your past due accounts, consider Clients ARM. We’re licensed in multiple states and we focus on the human side of collections. With more than 30 years’ experience and with a collections rate of more than 90%, we can help you get paid. Our pricing plan is easy to understand and we make the process simple. If you’d like to schedule a free consultation about your collections needs, contact us today.