Considerations before Hiring a Collection Agency
Companies must carefully evaluate before hiring a collection agency. Factors to consider include the amount owed, the relationship with the debtor, and the type of debt.
- Small debts may not justify agency fees.
- Agencies charge 15-33% contingency fees or fixed rate contracts.
Benefits of Hiring a Collection Agency
Hiring a collection agency can be beneficial in recovering lost income from bad debts.
- Agencies have access to information you may not have.
- Agencies can effectively recover debts and improve the chances of payment.
- Communication and mutual respect are essential throughout the collection process.
Importance of Timely Action
The sooner a collection agency starts collecting, the better the chances of success.
- The probability of collecting a debt decreases after 90 days.
- Avoid waiting too long before seeking assistance.
Overall, hiring a collection agency should be done carefully, considering costs, relationships, and expected results.