4 Things You Should Know About Debt Collection Services
Debt collection services aren’t just used by lawyers, doctors, and credit card companies. They are used by businesses that offer a variety of services and products. They aren’t just used by large corporations. They are also used by small companies who need to collect on the money owed to them and yet devote the majority of their day to growing their business and providing services to their clients. The problem? Most businesses don’t know where to start when it comes to choosing the right debt collection service.
Attorney's A.R.M. is here to help. We offer many services in addition to debt collection. Because we provide debt collection services to many attorneys, healthcare providers, and service-based businesses, we’d like to give you all the information that you need to think about when you’re making this very important decision.
Understand the Terminology Related to Fees
Debt collection services provide their expertise to your company in exchange for a fee. Just like you, they are a service provider. It helps if you think about it in the sense that debt collection services are a professional convenience experience. You could certainly do your own debt collection, but that would take away from your profit creating activities. So, debt collection services is a convenience you pay for in order to save time.
As such, it is of vital importance that you understand the terminology related to the fees associated with debt collection services. Generally, there are two types of fees that you’ll see. Debt collection services work according to a flat fee or a contingency fee. With a flat fee, you pay one price regardless of the amount of money that is recovered. A contingency fee means that the agency keeps a certain percentage of what they collect. It’s important that you know the difference and know which fee model will work better for your business. The main thing to keep in mind is that if someone owes you $1000.00 and the collection agency collects all of it, you will not get the full amount. The debt collections agency keeps their portion and sends you the rest.
Bad Faith Insurance
You can do all the research in the world on debt collection agencies and the agency of your choice may very well appear clean as a whistle. You should also make sure that they carry bad faith insurance (more commonly known as errors and omissions insurance). It just takes one rebel collector to get the entire agency into trouble…and sometimes their trouble can become your trouble because they are, to some degree, representing your business. Protect yourself and your business by verifying that the debt collection agency has bad faith insurance.
Ask About Skip Tracing
Sometimes, debtors change their phone numbers, move without a forwarding address, and do what they can to drop off the face of the planet. In the cases of accounts that are of smaller monetary value, it might be best to just let it go. In other cases, you need to continue your collection efforts. Ask if the debt collection service provides skip tracing. Also, if they provide skip tracing, is that part of their basic package or will it cost you extra?
Verify Credentials
One of the most important things you can do is verify the credentials of the debt collection agency. For instance, Attorney's A.R.M. is associated with the ACA, WCA, and HFMA. We would expect any and all potential clients to contact each organization to determine that we are a member in good standing.
Learn More About Debt Collection
Attorney's A.R.M. provides numerous posts about debt collection here on our blog. Check out our beginner’s guide to debt collection and how debt collection improves your bottom line. Submit your questions to us through this form and get a free, no-obligation answer as well as a free process review of your accounts receivable and debt collection methods. What are you waiting for? Find out for yourself why doctors and attorneys love Attorney's A.R.M. and our more than 30 years of experience.
