Every state will have its own collection agency laws, laws that dictate what types of businesses can use collection agencies and how the collection process must be handled. Obviously, businesses should always strive to work only with collection agencies that know and carefully abide by all of these laws. Aside from that, however, it’s also important to find a collection agency that’s actually going to do its job and benefit the business and its reputation in the long run.
One of the top ways for businesses to find good collection agencies is to ask for referrals from others who are “in the know,” meaning businesses and individuals who are likely to have used collection agencies in the past. Some probable places to find great references include:
l Accounting firms
l Business contacts
l Law firms
l Chamber of Commerce
l Better Business Bureau
While referrals can go a long way in selecting a good collection agency, businesses are encouraged to work only with the most experienced agencies in the business. Even more importantly, businesses should seek to work with collection agencies that have experience dealing specifically with companies like theirs. Collection laws can vary from one type of industry to the next, making it smart to work with an agency that’s familiar with the industry’s common collection practices and unique needs and challenges.
Under collection agency laws, collection agencies must be licensed to practice in the state in which they’re located. For businesses that only deal with in-state customers, working with a collection agency with only a local license is fine. Businesses that deal internationally or nationally, however, will need a collection agency that’s licensed to practice in all areas where customers live.
There’s a lot to think about when selecting a collection agency, but keeping these tips in mind can help businesses to make the right decision.