Collection Agencies

ASTA Funding, Inc. Credit Corporation Group Ltd FCA INTERNATIONAL LIMITED GSOCIETY, INC.

Intrepid Holdings, Inc. Intrum Justitia AB Lehman (t.h) & Co., Incorporated NCO Group Inc.

Receivable Acquisition & Management Corporation Revcare, Inc. Union Corporation

Guide to Finding and Using a Collection Agency

How to call in the collection cavalry before it's too late
By Daniel Kehrer

The term "delinquent account" is not something small business owners want to hear. It conjures images of cash shortage and an often difficult process of finding and working with a collection agency. You may be tempted to stretch terms and extend deadlines before deciding on a formal collection effort.

But recognize that the longer you wait, the less likely you are to collect your cash. According to the Commercial Collection Agency Association, your odds of collecting are this:

1. After three months: 73% probability of collecting
2. After six months: 57% probability of collecting
3. After one year: 29% probability of collecting

Bottom line for small business: Start taking action as soon as your receivables go past their due dates, and call in professional help if you aren't equipped to handle collections yourself.

Action Steps

The best contacts and resources to help you get it done

Link up with an agency that's fully certified Commercial Collection Agency Association (CCAA) members are certified by the Commercial Law League of America.

I recommend:  Find an agency in the CCAA directory; get free collection advice and check out their code of ethics.

Consider an intermediary solution Most small businesses are familiar with D&B for credit report purposes. But D&B Small Business Solutions also offers debt collection services, including demand letters.

I recommend:  D&B's debt collection services can help you collect money owed to you without alienating customers. Or hire your own outside collections department through an affiliate of the National Association of Credit Management. Search by city and state for a provider in your area.

Summon the collection pros while there's still time Each passing month dramatically reduces your chances of getting paid. Consider bringing in a collection agency after 90 days.

I recommend:  ACA International can help you find a collection agency, attorney or other professional in your area.

Locate a collection agency for a specific purpose Approaches differ for retail, medical, commercial and other types of collections.

I recommend:  At eCollectionAgencies you can select a collections category and state to find just the right type of agency for your purpose.

Tips & Tactics

Helpful advice for making the most of this Guide

• Let customers know what your credit policy is in order to eliminate misunderstandings. Reiteration of that policy, when a payment is first overdue, is the first step in facilitating payment.
• Keep credit records current. Changing markets and management directions can quickly alter the health and stability of a company. Keep abreast of trade reports on specific companies, especially those which are your current customers or potential customers.
• Periodic review of collection policies and procedures is always beneficial. Unforeseen events can never be eliminated, but you minimize your company's chance of loss by rigid adherence to your policies.
• Be very particular regarding which customers are permitted to use extended payments. Too many will not only endanger your company's cash flow, but also lead to undesirable precedents as well.
• While partial payments may show 'good faith,' and part is better than none, the best practice is to acknowledge part payments but demand a commitment for the balance.
• Make sure you are getting through to the right person - the decision maker. If a visit to the customer is necessary, do it.