What to Look for in a Collection Agency


Collection agencies, as a whole, don’t necessarily have the best reputation as business entities. In fact, you’d be hard pressed to find any individual or business excited about the possibility of being contacted by a collection agency.

Often, even having an overdue bill sent to a collection agency is enough to entice a would-be “ne’er do well” to see the light and pay back what they owe. While such a reputation might be a good thing (as it gets the delinquent party to repay), there is also a negative side to this reputation.

As a reputable business, you want to ensure that other businesses you use to represent you are also reputable and have a good standing in the business community. It’s a fact. Businesses you hire to represent you also reflect upon you – whether that reflection is positive or negative. You want to keep that image as positive as possible.

Therefore, one of the major factors you should consider when looking for a collection agency is reputation. You want a collection agency that has a solid reputation in the business.

Another major factor is experience. You don’t want to hire a collection agency that’s going to fumble the process and leave you out of the money owed. You want an agency that has a proven track record of getting the job done and deliver to you the expected performance.

Methodology is also important. When investigating a collection agency, ask what kinds of communication methods they use to contact the delinquent party. Do the use mail? Ask to look at the various form letters. Look at their phone scripts to see how the agency will be speaking to your overdue debtors.

Does the agency “do its homework” on each of the debts they work to collect? How thorough are they in understanding the details behind the debt and the relationship between you and the debtor? The more detail oriented the agency is, the more likely they’ll be able to handle the debt collection effectively.
Individual debtors will sometimes “skip town” by moving from one geographical location to another to avoid repaying a debt. The term for finding these individuals is called “skip tracing”. Check and see if the agency you’re considering has a way to “skip trace” these delinquents. If so, find out how they do it and how effective their method is.

Some states require a collection agency to be licensed in that state to practice. Make sure the agency you chose is able to collect from the parties in the states from which you need debt collected.

Along with licensing, a collection agency should be insured. An insurance policy collection agencies can obtain, An Errors and Omissions Liability Insurance Policy, can protect not only the agency itself, it can also protect you. This policy protects the collection agency and you from debtor lawsuits. Debtors may sometimes decide to sue for imagined harassment. Check to see if the agency you’re considering has an up-to-date policy.

Shop around before you make a decision. If possible, visit the collection agency and talk to them to get a better feel for how they work. Definitely ask for references. You want your experience with a collection agency to be a good one, so make sure you consider your decision well before making it.