Unpaid bills are a reality every business owner has to deal with. To recover owed money, many businesses decide to turn to debt collection agencies. A collection agency specializes in collecting payments on overdue accounts.
At what point on an overdue account you decide to bring in a collection agency is totally up to you. Most businesses will send accounts to a collection agent after eight months but there are some that will bring in an agent after only three months.
Collection agencies (search) will attempt to collect on bad debts by mail and phone. For larger debts they will send letters and make phone calls. Smaller debts don't always justify the cost of phone calls.
Some things to consider when choosing a collection service:
Method of collection:
You should review the letter the agency sends out and be sure the debt collection personnel are familiar with any regulations or laws protecting debtors from certain methods of debt collection.
How you work with the debt collection agency:
Be clear on how information on delinquent accounts should be transferred to the agency, how collected funds will be sent to you, and how you stop debt collection efforts if you receive payment.
The agencies reputation:
Be sure to check the references of anyone you consider sending your delinquent accounts to. If possible, ask others in a similar business to yours which debt collection agency they use.
