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When should I use a Collection Agency?
Home » Accounting » Collection Agencies » When should I use a Collection Agency?Many lenders employ collection agencies if a debt is eight or more months delinquent, but other companies turn debts over to a collection agency after a delinquency period of only three months. Ultimately, of course, you should base the decision upon the specific circumstances of each delinquent debt. There are many things that may influence your decision to retain or not retain a collection agency, but as factors in your decision you should consider the delinquency of the debt, the amount of the debt, and your relationship with the debtor. Is the debt genuinely delinquent, and have normal follow-up letters had no effect? Is the debt large enough to justify the added expense of a collection agency, particularly if the collection agency may collect half of the debt as a fee? Have you enjoyed a good relationship with the debtor in the past, and is that relationship potentially important for the future of your business? The last question is potentially quite important, because many collection agencies are very aggressive in their collection attempts. If you subject a debtor to the collection methods of an agency, you may damage your relationship with that debtor.
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