Collection Services – What to Expect and How to Manage Your Relationship With a Collection Agency

Whenever you hear the words collection services, you might envision your credit card company or other creditors contacting you after failing to receive payment. But businesses owe money, too, and they often turn to debt collections agencies for help when their invoices go unpaid. Depending on the situation, debt collectors can be aggressive and impact your credit rating, but they can also work within laws to settle debts fairly. Learn what to expect from a collection agency and how to manage your relationship with one so you can minimize damage to your reputation and your cash flow. This link :

What are the rules for collection agents?

A collection agency attempts to collect past-due invoice payments on behalf of a business in exchange for a percentage of the amount collected. It’s typically a good idea to only hire an agency after you’ve given customers multiple opportunities to pay and when your invoices are several months overdue.

Some collection agencies are “first-party” — they’re departments or subsidiaries of the original creditor that owns the debt. These types of agencies tend to get involved earlier in the collection process and have a greater incentive to maintain a constructive customer relationship. Other collection agencies are “third-party,” meaning they’re not affiliated with the original creditor and must follow strict rules for third-party debt collectors, according to the Federal Trade Commission.

Look for a company that is licensed in your state and has an excellent track record. Ask about the agency’s fees and its method of debt recovery. It’s also a good idea to research an agency online to see what others have said about their performance and whether they’re reputable. You can also check with your local office of financial regulation or consumer affairs to find out if your state requires collection agencies to be licensed.