Many questions arise when you think of sending an account to collections. Let’s try to answer those questions for you.
1. How deliquent should I let an account get before I send it to a collection agency?
This will depend on the policy you have already set forth and state laws. Make sure you have sent notice in either a letter or in the upfront communication to your collection policy. Also make sure you stick to this policy. If you are lenient on this point then you will have people that abuse your payment policy. Set guidlines and make sure you enforce them.
2. Is there a dollar amount I should send? Again, put this in your guidlines and stick to it. While some collections agency won’t take anything to “small” you also don’t want to waist money on small balances with the fees they charge. This amount will depend on your business and what fees will be incurred from the collection agency. Also many collections agenciens won’t diligently go after smaller balances. They aren’t worth their time for the money they will be getting. Find out their rules on these totals.
3. What collection agency should I use? Shop around. Find the one that best fits your needs. What debt is their speciality? How much do they charge? How effective are they? Will they sell your debt? Ask as many question as you want, know they are working for you. Therefore interview them and find the best candidate to fit your business. They are an extension of your business.
Sending an account to collections can be stressful, but with proper guidelines and the right collection agency hopefully it will be less stressful.