Collection Agency...... Filing Suit
May 21, 2015 at 12:50 PM
If you submit accounts to a collection agency, you may be familiar with the process of filing suit on accounts. A collection agency is bound by the Fair Debt Collection Practices Act, including time parameters on contacting and collecting on your accounts. Once the agency complies with regulations, there is a great deal of difference in policies between collection agencies on how accounts are worked. Some agencies file suit on accounts as soon as they have complied with regulations. But is this in your best interest as a business?
There are several things to consider regarding the practice of filing suit. It costs your business – and in several ways. We recently visited with a medical practice regarding their collection agency and they stated that patients complained about suits being filed with little warning and few options to resolve the debt. Not only does this “quick to file suit” strategy reflect poorly on the business (medical practice) but also costs money! While a collection agency may state a specific percentage commission rate (maybe lower than their competitors) – if they are quick to file suit, the commission rate goes UP and includes additional fees.
Choose your collection agency carefully. Ask the question – When do you file suit and how much additional commission is it going to cost? You work hard to run your business. Don’t let collection practices and higher than necessary commissions affect your success.