Collection Agency FAQs
Account Adjustment Bureau or AAB collection agency FAQs - Frequently Asked Questions and answers about dealing with a debt collection agency.
Commercial Debt Collection
Why Use a Commercial Debt Collection Agency?
In most cases, commercial creditors and their customers can resolve matters between themselves through good communication and mutual respect. However, situations can arise where communications stop. A professional commercial collection agency introduces a third party to the negotiations. This third-party dynamic, combined with the agency's ability to impact the debtor's credit rating negatively, exerts pressure upon the debtor to re-establish communications to resolve the matter in some way.
Better agencies work on a No Collection – No Fee basis. You can rest assured that the collection agency will exhaust every avenue of recovery.
When Should I Hire a Commercial Collection Agency?
While a collection agency may be retained at any time, generally, most professional credit managers operate using a 30/60/90 day aging process for their receivables. Industries that involve perishables, such as food, use a 7/14/21 day aging. Introduce a collection agency immediately if your customer continues to delay payment beyond your industry's standard terms. As mentioned above, if your customer exhibits warning signs, you are encouraged to list their account with a debt collection professional immediately.
What Kind of Recovery Performance Can I Expect?
Like the old saying goes – "garbage in - garbage out." And so it is with the debt collection industry. If you are serious about getting your money back and not trying to seek revenge, then you stand a very good chance of recovering some, if not all, of your money. Remember, commercial customers can only survive if they have cash flow. Once their cash flow has stopped, the chances of recovery drop dramatically.
Retaining a collection agency earlier rather than later will exponentially increase the recovery of funds owed to you. Unfortunately, no collection agency can guarantee you a certain recovery percentage on your accounts. Factors such as the accounts' age, customer industry conditions, and thoroughness of the credit application all play a part. Sending an account to a collection agency after all the telephone numbers go out of service and your customer's place of business is empty is probably a waste of time.
I've Decided That I Need to Hire a Collection Agency. What's Next?
We're sensitive about our corporate image. Can you collect without damaging our goodwill?
As with any business, you cease to exist without customers, and the debt collection business is no different. We use trained and IACC Certified Commercial Collectors to manage our clients' accounts. Our staffs are mindful of the fact that a clients' corporate image is of utmost importance. Tact, professionalism, and our firm but fair approach to negotiations ensure that your funds are collected while mitigating our reputation risk in the marketplace.
Are There Any Agreements or Contracts I Have to Sign?
Yes. AAB must have your written consent to act on your behalf.
What Fees Can I Expect to Pay?
Contingency fees can range anywhere from 5% all the way up to 50%. Factors such as the number of days past due, legal status, balance outstanding, and previous collection history can positively or negatively impact collection fees. When choosing any contractor, it's a good idea to choose neither the highest nor the cheapest, and the debt collection industry is no different. The purpose of hiring a collection agency is to get your money back. Call us for a confidential no-obligation consultation, and we will provide you with a firm quotation.
What Information Does a Collection Agency Need to Begin the Work?
When you turn an account over for collection, make sure you give the agency a complete package. Information should include:
- A statement of all charges.
- Signed credit application
- Copies of purchase orders, invoices, proofs of delivery, contracts, etc.
- Photocopies of customer's checks for any partial payments.
- Any correspondence sent or received on any of the outstanding items together with any claims of shortages, non-conforming goods, breakage, or returns.
- If you have personal or corporate guarantees and/or any security agreements, include copies of these, along with copies of any UCC forms showing the dates filed.
The more backup detail the agency has, the better it can work for you. If the matter has to go to suit, you would have to provide this information anyway, so you might as well do it at the beginning of the process. If any paperwork is missing, it gives you time to locate it.
What happens if a Customer I've Assigned to Collections Calls Me?
This is very common. Upon assignment, our staff immediately attempt to make contact with your customer via telephone, email, text, social media, and regular postal service. In some cases, the debtors would rather deal with the original creditor than the collection agency. Suppose your company mandates high levels of customer service. It will be very tempting for you to want to communicate with your customer, especially if you were having a tough time getting them on the telephone in the first place. Our recommendation is to resist that temptation. Before working your accounts, we invest heavily in credit reports and asset searches. We often know that your customer has the financial capacity to obtain full payment; however, your staff may not and, inadvertently accept an arrangement from your customer that dramatically slows your recovery efforts. We recommend advising your customer to contact us to finalize negotiations.
Do I Have to Pay a Collection Fee if The Customer Pays Me Directly?
We encourage our clients to attempt all avenues of recovery before they retain a collection agency. Once you've hired an agency, all funds paid to you or the agency will be subject to their fees. It's not uncommon for debtors to think that the collection agency will not receive its fee by paying the original creditor. Suppose you have asked the collection agency to report your claims to the credit bureaus. In that case, it is the agency's legal responsibility to report the correct amounts outstanding. This legal responsibility extends to our clients to promptly report all payments to the collection agency for accurate recordkeeping purposes.
How does it Work if my Customer Wants to Return the Product For a Credit?
When merchandise is re-stocked in place of cash, our commercial debt collection fees are charged based on one-half of the value of the recovered merchandise.
What Happens if We Determine The Account Was Paid Before Assignment?
Should we discover that the debtor paid an account prior to our office receiving the claim, one-half of the normal fee will be charged on the amount paid.
Can I Withdraw My Claim From The Collection Agency?
Yes; however, our full commission rate will still apply.
Can You Handle International or Foreign Accounts?
Yes. Our firm is fully capable of managing claims in over 200 countries worldwide. We provide our clients with the ease of "one-stop shopping" instead of managing multiple vendor relationships. Through our active involvement with the International Association of Commercial Collectors, we maintain a reciprocal network of trusted collection service professionals worldwide.
What is the Best Way to Send My Accounts to You?
To help your agency make fast contact with your slow-paying customer, we recommend emailing the full document package to email@example.com. Some clients prefer to securely upload confidential information to us on our DropBox. Accounts may also be mailed via United States Postal Service to our address at Contact Us.
How Do I Know My Accounts Are Being Worked Effectively?
At the end of each business day, we send out a New Business Acknowledgement Letter to each client that assigned submitted accounts. Our service level protocols dictate that our collectors contact our clients directly within 72 hours of assignment with a status update on your recently assigned accounts. You will receive an opinion on the recovery potential of your account and the next steps that we intend to take. We're very proud of our professional certified commercial collectors and encourage our clients to call our collectors directly. Who knows better what's going on than the collector working your account?
How Long Does the Collection Process Take?
The simple answer is anywhere between 5 seconds to never. Just as there is no guarantee of recovery, the actual process itself is subject to many factors. It is not uncommon for a customer to immediately drop payment in full to your office after receiving contact from one of our collectors. This is not a reflection of your inability to collect but rather a negotiation tactic on your customer's part. The customer was waiting for you to send it to collections to buy themselves more time. Our collectors will be in contact with you throughout the process.
How Do I Obtain Reports On My Accounts?
As mentioned previously, our collectors will be in touch with you using your preferred contact method to keep you abreast of all developments. In addition to our telephone, email, or SMS contact, you will have 24/7 secure access to our database to review our progress.
Once the Agency Receives Payment, How Soon Do I Get My Money?
Remittances can be made at any frequency, depending upon the volume of collections and type of payment received. Usually, a check is received and deposited to our clients' trust account. We allow 5 business days for the funds to clear our trust account, and then remittance can be made at that time. If you have a more significant number of transactions, we recommend a bi-weekly or monthly remittance. Transactions involving funds drawn on a foreign bank may require extra time to clear.
If the Agency is Unable to Collect, Then What?
Our firm not only makes collection calls, but we reconfirm the 5 C's of credit granting. They include: Character, Collateral, Capacity, Conditions, and Capital. We may conclude that the account is not worth suing and report the account as closed during our investigation. If, on the other hand, we determine your customer has the cash flow and ability to pay but remains uncooperative, then we will provide you with a detailed Suit Approval Request, and if you concur with our recommendation, we will engage the services of an attorney to file suit.
We do not sue for the sake of suing. We ensure a good potential for recovery, otherwise, it is a waste of time and money for all stakeholders.
What Sets Your Firm Apart From the Rest of the Competition?
Three words: Honesty, Integrity, and Expertise. No unrealistic guarantees, no overstatements, no promises we don't intend to keep. When you deal with our firm, we commit to telling you the truth: good, bad, and ugly. We strive to provide you with objective data consistently, so there are no surprises. We believe that surprises are for birthday parties – not your accounts receivable.
What if We Are Not Happy With Your Service?
We believe that reasonable people can come to reasonable terms. In the unlikely event our staff can't meet your needs, the issue is escalated to Management for immediate resolution. As a client, you will have direct access to the agency's owners at all material times, either by telephone, email, SMS, Zoom or in person. Should the differences be deemed irreconcilable, then we will assist you in transitioning to a new collection service provider as soon as possible.
What Steps Does Each Account Go Through?
There are only three things that a debt collection agency can do with your accounts: Collect, Sue, or Close. The agency's job is to determine which outcomes best suit each situation in the shortest possible time. If your collection agency is not making objective decisions, it could be costing you money. Our firm performs a thorough investigation on all accounts over $1,000.00. Those under the $1,000.00 threshold receive varying degrees of treatment based on the dollar values assigned.
How Does Your Agency assist us With Our Risk Management Initiatives?
We employ an Internal Audit and Compliance Management team dedicated to providing our clients with the latest credit industry protocols and legislative changes that may affect your industry. To be successful in commercial collections, we make it our business to get to know your business. Examples of client risk management initiatives include, but are not limited to: Review of Credit Application Provisions, Obtaining Consent from Consumers to Communicate via Cell Phones, and Feedback on Credit Underwriting decisions.