4 Reasons to Use a Collection Agency

Whether the U.S. economy is strong or weak, most business owners have a problem with uncollected debt. Although business owners are quick to realize this problem, many never realize their uncollected debt is also a likely source of potential revenue. Throughout the United States businesses are sitting on uncollected bad checks that could be collected or have accounts receivables that are left virtually untouched.

When asked why bad checks and accounts receivables are never turned over to a collection agency, business owners typically give one of four reasons. Some write off uncollected accounts because they are too small to have a collection staff. Others are unfamiliar with how collection agencies operate. Another reason is the belief that using a collection agency is “too costly.” Still others are concerned that a collection service will drive away existing customers. When business owners—especially small business owners—finally see what a collection agency can offer, they often ask themselves why they did not seek professional collection help in the past.

Using a professional collection agency is often a very wise business tactic, especially when bad checks are involved. Many business owners do not know there are “returned check recovery services” (agencies that specialize in bad check collection). Moreover, many do not realize that these services are completely free to businesses or almost free (in some cases there is a small sign up charge). Bad check collection services are often funded by a fee imposed on the bad check writer. If a bad check collection service cannot collect on bounced checks, the check recovery service often absorbs all the collection costs.

In addition to bounced checks, most businesses have outstanding accounts receivables. As with bad checks, receivables collection is sometimes delegated to the office staff or given a very low priority in many small businesses. This is unfortunate because some collection agencies specialize in offering terrific plans to collect on this type of debt.

Some accounts receivables collection services will send out a series of collection letters on behalf of a business. These collection letters may cost as little as $2.00 each and are often effective in helping collect the debt and effective from the standpoint of outsourcing a simple but important task. Collection letters are often an especially good option for medical practices. When a business spends $6-15 for a series collection letters, but collects an account worth several hundred dollars, they immediately realize the value of this simple and cost-efficient service.

Another collection option is a contingency split (a collection service returns a percentage of what it collects). The returned amount often ranges anywhere from 50-65% of the recovered funds. If a collection agency cannot collect, many services will absorb the collection costs. For debts that amount to several thousand dollars, businesses may wish to consult a collection attorney instead of a collection agency.

Collection agencies are an important part of almost any size business and you may find local and national services through search engines like Google.