Everything You Need to Know About a Debt Collection Agency
What exactly is a debt collection agency?
How do debt collection agencies operate?
A debt collection agency is a company or individual authorized to act as a third party on behalf of a creditor to obtain payment from a past-due customer. The history of debt collection agencies is as old as commerce itself. As long as creditors allow customers time to repay debts there will be a need for debt collection agencies.
Typically, a debt collection agency gets paid a commission depending on how much money they recover for their customers. Historically, the commission debt collection agencies charge runs between 20% to 50%. They will usually charge a higher fee if the debt is older or if it’s expected to be more difficult to collect.
A debt collection agency can also be a data furnisher. They report all debtors assigned for recovery to the credit bureaus. However, before reporting the data to the credit bureaus, the agency must be sure that all debts assigned for recovery are legitimate debts. A responsible debt collection agency will take every precaution to ensure that all data is accurate before reporting a debt to the credit bureau.
Sometimes creditors make mistakes that the debt collection agency has no way of catching. If you see that a debt collection agency has made an error on your credit report, call them, and they will be pleased to investigate and make the necessary corrections.
Some debt collection agencies may also manage current debts for customers. Debt collection agency software is superior to most creditors' customer management systems because it focuses only on the contact management function. When the debt collection agency can easily exchange data with its customer through an API, they can make calls under the creditors' name and help keep the client's receivables current and the customers paying within terms.
If your customers are paying you more slowly than the terms of your agreement require, leveraging the expertise and technology of a debt collection agency may provide you with the cash flow boost your company needs instead of constantly dipping into your operating line of credit.
Debt Collection Agency Michigan
Account Adjustment Bureau has been collecting debts for nearly 50 years. If your firm is looking for a debt collection agency, contact us today and have a confidential discussion on how you might benefit from retaining our services.