Times are changing, and so must collection techniques. With the Consumer Financial Protection Bureau’s “Regulation F” becoming effective December 1st, partners must adapt and optimize their practices to ensure more efficient debt recovery.
- Using a collection agency is too expensive.
The benefits of using a collection agency far outweigh the costs associated with them, as long as you are working with an agency that has a high recovery rate. Companies that spend months and sometimes years trying to collect on old accounts are often just spinning their wheels. Agencies with long histories of success can collect quicker and easier than you ever thought possible, turning your aged receivables into bottom-line revenue.
- Collection agencies only work on very old accounts.
Collection activity goes through many phases. Outsourcing receivables, for instance, is the process of using a collection agency partner to do a “soft-touch” method of collections that may simply be calling a client on day 31 and giving them a gentle reminder that their bill is due. This outsourcing activity may last 30, 60, 90 days or longer until it is moved into a more traditional collections process that involves letters, more frequent phone calls, texts, emails, voicemails, and other collection efforts. From there, agencies will work with their clients to score and sort bad debt, and eventually move on to litigation, if necessary.
- A collection agency will just upset my customers, or my patients, and I’ll get a bad reputation.
Threats and abusive language is prohibited by federal law, and any agency engaging in such activity will face severe consequences. The best agencies recognize that they are ultimately the face of the business they represent, and as that agent, they should be conscientious of the fact that the customer or patient will associate their activity with the businesses they serve. It does not behoove a collection agency to damage relationships with the customers of their clients.
- Collection agencies do not want to work with a small business.
Many collection agencies such as Account Resolution Team, understand the value of small businesses and the positive impact that they have on our communities. Our economy thrives on small and large businesses. Collection agencies that embrace their small business partners have deeper relationships with the businesses that they serve in those same communities.
- All collection agencies are the same.
In reality, collection agencies vary as much as any business in any industry, just as no two doctor’s offices, restaurants, or banks are exactly the same. Some agencies charge monthly fees, others are contingency-only. What is most important though, is that you choose an agency that has a longstanding history of success and very high recovery rates.
- Collection agencies cannot find clients that change their address and phone number multiple times.
While this is certainly true with some agencies, it isn’t a fact for those of us with the latest innovations in technology. Account Resolution Team was instrumental in the development of the leading debt collection software in North America.
- When it comes to collection agencies, meaner is better.
Showing empathy, validating fears, providing support, and building trust have not always been core objectives for many collection agents. For this reason, consumers often respond to collections communications negatively as they are already on-guard before the framework of the solution can be established. Account Resolution Team understands this level of heightened human need and takes steps to promote kindness during the collections process.
- It is not worth the time it takes to get a collection agency all of my accounts.
This is the prime reason that technology plays a critical role in the adaptation of late accounts into a system. For Account Resolution Team, gone are the days when mass uploads required manual entry into a system. By utilizing state-of-the-art technology, accounts can be loaded immediately into the system, streamlining the process that begins collecting accounts to turn aged receivables into bottom-line revenue.
For more information on how Account Resolution Team can help YOU get your money, call 423-586-7613 or visit www.accountresolutionteam.com
If you’re in a product or service industry, you’ve likely faced a time when you realized your bad debt was catching up with you. At this point, you may have considered the use of a collection's agency. Maybe you were even scared to take the leap of faith? These fears may be the reason you’re missing out on the revenue that your business needs, negatively impacting your day-to-day business. In fact, a lack of funds can affect employee retention, lead to freezing critical marketing activities, and in extreme cases, can ultimately result in closing your doors permanently.
Large hospital systems usually have in-house collections departments, or they contract with an agency once a year. When the efforts of those agents fall to the wayside because a debt is deemed unrecoverable, a second placement agent is brought in to try and recover the debt.
According to Investopedia.com, recovery rate is defined as the extent to which principal and accrued interest on defaulted debt can be recovered, expressed as a percentage of face value.
Maybe you haven’t ever heard the term before. Perhaps you only think of debt collections in the traditional sense, generally debts over 90 days old that are deemed uncollectible by in-house methods. The fact of the matter is that you could be losing a lot of money during that critical first 90 days. The newer the debt, the more likely it is to be recovered. Therefore, most collection agencies charge a commission rate based on how old a debt is. The newer the debt, the lower the commission rate.
Mergers. Turnover. Layoffs. These dreaded words are whispered all-too-often among colleagues behind closed doors and after hours. Rumors and sometimes unspoken fears leave many employees lying sleepless at night, wondering what their fate is within their corporate environment. Now more than ever, job security concerns are at an all-time high as many businesses have shut down and others have laid-off crucial team members due to the ever-changing economy. However, this is not just a COVID-19 crisis. Acquisitions, employee replacement, and even drastic leadership changes have always been constant in corporate America. Many employees fear impending change and how it will alter their future—a future which includes a company they’ve worked with to build their career. The emotional loss that occurs between the separation of long-time employees and an organization leads to feelings of abandonment and mistrust in future endeavors. However, this discontent doesn’t end with the employee-business relationship. What about individuals and companies on the opposite side of this change? For sales representatives, how does the loss translate to customers that account executives have taken under their wing and fostered long-term relationships? We’ll tell you how—It downright stinks.
Size does matter.
In an age where the need to recover bad debt is more critical than ever, emotions are high, and clients are eager to turn their bad debt into bottom-line revenue. Speaking truthfully, because emotions are high, clients are also vulnerable and can be easily persuaded by promises that “bigger is better”; but what do you get when you partner with an entity that is so large? The mega-agencies might use intriguing promises of employing hundreds of collectors but may fail to mention that 50-60% of those collectors are in third-party offshore call centers in order to handle call volumes and offset costs.
It’s an unopened bill, an ignored phone call, a deleted voicemail. Sticking those bills in a drawer or straight into the trashcan doesn’t make the debt go away; in fact, doing so could actually be making you and your family sick.
You want your money, it’s as simple as that, and you deserve it! Not all collection agencies are the same. The overall success rate for a collection agency is determined by their rate of recovery. Rate of recovery is the percentage of money recovered on your debtor’s delinquent accounts. This formula at its simplest is like this; if a collection agency recovers $250 on a $2500 placement, their rate of recovery is 10%. When an agency has many clients in various different industries such as healthcare, banking, and leasing, their rate of recovery can be calculated by industry, and also collectively as a whole.