The best baseball players are said to be “five-tool” players — they can run, hit, hit for power, field, and throw. When scouts are looking at high school and college players, those are the things they are being graded on. And while there are not too many true five-tool players out there, most Major League Baseball players are really really good at all of those skills.
Collection agencies are very similar to baseball players in that there are characteristics they should be graded on prior to making a decision to place accounts there. Placing accounts with a collection agency is a big decision — that agency is going to mention your name when they call your customers, so they are an extension of your brand. You want to make sure that the agency is going to be professional, compliant, and, above all, respectful of your customers and the relationship you have with them.
That trust should not be just blindly handed over. You need to be sure that the agency has all the tools it says it has. That means:
- Making sure the agency is licensed. Many states require collection agencies to be licensed in order to collect in those states. Does the agency have licenses to collect in the states in which your customers reside?
- How many complaints have been filed against the company, either with the Better Business Bureau, the Consumer Financial Protection Bureau, or the Attorney General’s office of the state(s) in which they operate? A high number of complaints may be a red flag.
- Does the agency have enough capacity to handle your accounts? If they do not have enough staff, your accounts may not get enough attention and may languish. The longer that debts go unpaid, the less likely they are to be recovered.
- Has the agency worked your kind of accounts before? Agencies can grow and expand, but it’s usually best to choose one that has experience collecting your type of debt.
- Is the agency in a solid financial position? It may feel awkward to ask, but there are stories of agencies collecting money and keeping it to cover their own expenses instead of remitting those payments to the creditor.
- Are you comfortable with the collection strategy used by the agency? Some agencies rely on legal collection strategies — filing lawsuits to collect on unpaid debts. Are you ok with that? Others will or will not report the debts to the major credit bureaus. Are you ok with that? You need to know how your accounts will be worked and make sure you are comfortable with that plan.
There are many other questions that you should ask, but these should give you a good head start at making sure you’re going to be working with an All-Star and not a Bush Leaguer.