Third party collection agencies collected over $39 billion dollars for creditors in 2005. If you consider it in perspective, that amount was the equivalent of 3 percent of all before tax domestic corporate, or 11.4 percent of the profit for all U.S financial institutions. Immediately, you can see the importance of the third party collection agencies.

A third party collection company is experienced in the law surrounding the collection of debt. They have expertise to find assets and convince debtors to begin payment plans. This service provides a benefit for all concerned, since the debtor frequently finds a way to pay the bill in small increments, the consumer sees lower prices due to increased profit and the company that uses the 3rd party collection agency adds to their profitability.

1. Third party agencies reduce the cost of doing business by keeping your staffing costs lower.
2. The Federal Fair Debt Collection Practices Act mandates that all 3rd party collection companies follow specific procedures, none of which include bullying behavior of early collection companies.
3. It's important to find a 3rd party collection company that has a good reputation, since it reflects on your company.
   

Action Steps
The best contacts and resources to help you get it done

Find information about third party agencies to insure they meet your needs

You can find a variety of third party collection companies. Some companies specialize in specific industries. Other companies specialize in the dollar amount of the debt. In order to find the best company, you need to get a list of third party collection agencies that actively serve your state.

I recommend: Fill out a brief online form at Collection Agency Research to receive free quotes for third party agencies. BuyerZone offers the opportunity to compare rates of third party collection agencies worldwide.

Use a third party collection company geared to your business size

Not all companies work well for both small and large businesses. Some of the larger collection agencies have specific department that service businesses based on their size. Find a collection company that offers services for your business size.

I recommend: Transworld Systems Inc. offers GreenFlag profit recovery, which is appropriate for smaller businesses. The Commercial Collection Agency Association offers a list of the most prestigious affiliates in the area of collection.

Find out how the third party debt collection agencies charge for their service

Debt collection costs vary from company to company. The difference in cost doesn't always indicate quality; so, you need to also ask for the company's success rate. Some companies charge a percentage of the collection costs and others charge a flat fee. Still others guarantee that if they don't collect, you don't pay.

I recommend: Rapid Recovery Solution, Inc. guarantees that their service is free if they don't collect, and they'll provide you a free quote for their services. RentRecoveryService specializes in delinquent rental collection and offers a flat fee service.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Get quotes on costs and investigate companies before you select 3rd party collection agencies.