Small and medium size business often over look using a national collection agency for their past due accounts receivable. A bill becomes past due and there is an attempt from the accounting department to send a couple of letters or perhaps make a phone call or two, but it ends there. At that point it stays on the books until someone in accounting decides to write it off as a bad debt.
Large corporations do not operate this way. They have share holders to answer to and will attempt to squeeze as much money as possible from every source they can find. It is only a matter of whether the benefit outweighs the cost. Some larger firms will have elaborate in house systems to collect debt and then when there is very little chance of collecting, will then write the debt off as a business expense. Other firms, even large ones, have found that it pays to outsource the entire process after an account becomes 90 days past due.
National Collection Agency
A company will do this because it means an increase in revenue. The money that they receive is greater than the cost of collecting the money; either inhouse or through a collection service. This of course is obvious, but small and medium size companies will often overlook this service.
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national collection agency will be able to take your bad debts and recover a certain amount of them, and in the large majority of cases, you will benefit with more money for your business. There are various charges that can be assessed by an agency and you will have to get a quote. In many cases, a national collection agency will work on a commission basis. You only pay a commission on what is collected from the debtor. This is a win-win situation for you and the collection agency.
National Collection Agency
The amount of the commission will vary and is dependent on how many accounts that you have outstanding and the average amount per account, as well as the total amount of debt the agency will be attempting to collect. Many debtors cannot be found, and tracing their location to get the money owed to your firm takes time. This time will reflect the cost of collection.
The important thing to keep in mind is the national collection agency has skills and knowledge to find debtors and get them to pay. Although some debts will never be recovered, you will be surprised at how effective an agency can be. They have tools and methods that a small or medium business simply do not have.
There is no obligation to you or your firm to get a quotation, so it is recommended that you take the time to find out exactly what the costs are. If you have never used a collection agency before, you may have questions the relate specifically to your business; an agency will be more than happy to provide the information you need. A national collection agency is a service to your business like any other that is available and it can mean improved profits by lowering your expenses. In this case it represents a reduction in bad debts expense.