How to Evaluate and Select Your Collection Agency or Agencies
By James P. Lee, CCE
With so much solicitation from numerous collection agencies, it can
make you numb. You have lots to do and fielding phone calls from collection
agencies you have never heard of can make you weary, very quickly.
So how do you select the appropriate agency (or agencies) to utilize
for your collection problems?
In my experience I have always used at least two agencies. Why? In case one
agency flops or fails to perform I always had a backstop and had the time and
freedom to look for a replacement. Longstanding relationships with collection
agency representatives and their employees are extremely important for good
So how do you evaluate an agency?
Make no bones about it. There are a number of excellent national and regional
agencies out there. Out of respect for those I don't know, I won't name any.
The things I look for in performance in a collection agency are these:
1). Performance, performance, performance! Your collection agency
(or agencies) should perform at a level of 35 - 40% of placement
value. Realistically, we all know that by the time we place an account
it may very well be (DOA) Dead On Arrival when we submit it.
2). Request a face to face meeting with a representative of the
agency (or agencies) at least quarterly to discuss their performance
level, your goals and objectives AND any differences. If appropriate,
discussion of specific accounts may be necessary. Although the agency
Sales representative may not have specific information at hand, they
should have access to the information and be able to get it to you
quickly. GET IT!
3). Prompt and accurate reporting is of the essence. You need to
know what your agency is doing. Ask for weekly, monthly or at the
minimum, quarterly reports and assessments.
4). Look for an agency that is not hesitant to refer an account
to a legal organization to file suit. This is essential as it may
prompt your customer to pay before going to court, and if not, you
may be able to assess a lien on specific assets of the customer.
The customer will not be able to sell or liquidate that asset without
relieving the lien first.
Most importantly is to have a comfort level that is acceptable to
you in regards to your relationship with the representative and the
company. If you are uncomfortable, try not to go there - Sometimes
however, it is not our decision. Try to stay in your comfort zone!!
James P. Lee, CCE is a Certified Credit Executive located in the
Chicago area. With over 20 years of experience in the Credit Industry,
he has been affiliated with several credit groups and Associations
over the course of his career. Jim has served as the Vice President
of MEMA (Motor Equipment Manufacturers Association), as a Board Member
of the Consumer Housewares Group, and as a member of the Board of
Directors of the National Association of Credit Managers, Chicago
Midwest. Jim is currently self-employed as a Consultant in the area
of Credit and Receivables Management. Jim can be reached at (708)
349-3896 if you have a need for his services.