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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 results.

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.

Reprinted with permission from the ©2002 Covering Credit Newsletter 9/4/02 Edition.
All Rights Reserved.

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