Handling collections for a business can be tricky. Slow payments and delinquency are challenging, especially in today’s dynamic environment where timing is everything. Having a specialized in-house collections operation is one way to go, but it can be time-consuming, laborious, and expensive.
The alternative is to look outside to agencies for debt collection support. Instead of entrusting third-party collection agencies right away, many companies are choosing to hand over their debt needs to a dedicated outsourcing agent. Not only does this enable the company to retain 100% of the collections, but it also allows freedom to decide the tone of collections, maintain client relations and safeguard client data.
Since trusting an agency with debt collections is a significant decision, here are some important questions to ask so as to ensure that your process is in the most reliable hands possible:
1. What type of collections do you have expertise in?
Different businesses have different collection needs. When outsourcing to an agency, you should check whether it specializes in commercial collections (B2B), consumer collections (B2C), or both. Collection strategies vary for each, so if your business requires B2C support but the agency largely does commercial collections, it may not be a good fit for you. Along with collection type, the agency’s location and the industries it has expertise in is also worth considering.
2. Do you comply with all the debt collections regulations?
In the United States, the Fair Debt Collections Practices Act is the important federal law that governs third-party debt collection practices in the country. This does not mean that first party collectors are free to do as they please. Under the Dodd-Frank Act of 2010, all concerned parties need to abstain from engaging in Unfair Deceptive Abusive Acts and Practices (UDAAPs). The Consumer Financial Protection Bureau goes after any creditor that employs practices that are considered unfair, deceptive, or abusive to debtors. So, the collection agency you seek out must be efficient enough to recover outstanding dues without attracting unnecessary regulatory scrutiny.
3. How do you hit the sweet spot between debt collections and consumer relations?
Apart from being lawful, it is also important for companies to maintain a good relationship with clients to ensure continued business. A tarnished reputation can be hard to recover from and can be just as damaging as bad debts, if not more. An outsourced collection agency is your representative, acting on your behalf. A reputable agency should treat your debtors with dignity and respect, and engage in patient, meaningful exchanges that will assist the debtor with repayment solutions rather than resorting to extortive or abusive techniques.
4. How does technology fit into your collection strategy?
A strategy that still relies on manual tracking or postal reminders to debtors is unlikely to be quick with collections. When outsourcing your debt collections, look for a provider who is equipped with advanced electronic tracking and outreach, automated workflows and checks, and fast software that relies on technologically-advanced solutions.
5. How important is data analysis?
An effective collection strategy does not just resort to damage control but attempts to stymie risk even before it arises. An outsourced provider who effectively analyzes customer data and trends can identify potential delinquents even before they default. This can help outline a strategy to encourage payments on time such as sending out timely reminders or suggesting alternative payment options that can help avoid defaults.
Bonus Question: How can Allsec help?
Allsec’s expert services leverage the strength of its people, processes, and technology to provide competent first party collections solutions to its clients – some of the largest banks, mortgage providers and lenders in the United States. The agency’s automated invoice matching and tracking, e-invoices, and top-notch security practices ensure that collections are quick, lawful, as well as respectful to debtors. With Allsec’s first party collections services, you will be able to focus on your core competencies without having to worry about the tedious but crucial task of chasing after payments.