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third party collection services
Third Party Collection Services: When should you use them?
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By: Arlette Measures
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If you have exhausted every means at your disposal to collect unpaid invoices from your customers, you may end up wondering, 'Do I need a collection agency?' Like many business owners who face a number of slow paying or non paying clients, your business would likely benefit from the services of a professional bill collection agency or attorney. A professional debt collection agency will collect payments for your outstanding invoices, usually for a percentage of the receivables they are able to collect.

Some businesses may rely on collection agencies more than others. A freelance graphic designer may only need to use a collection agency's services once during her entire career, while a larger company may require the services of a collection agency frequently.

Many businesses may never need to use a collection agency. However, in the event that you have a client, vendor or customer who defaults on payments, it is advisable to have a reliable collection agency available to pursue the non-payee.

You will encounter a variety of third party debt collectors, from small local agencies to larger, national companies. Others may specialize in certain types of debts, such as consumer debt collection or business debt collection. The best collection agencies credit their success to the persistent use of legal and diplomatic means to obtain payments on outstanding debts.Every situation is different, and collection methods may vary with each collection agency.

It is important to find an agency that will consider your company's unique needs, and will treat your customers in a professional and courteous manner. A collection agency will probably use many of the same methods you have already tried. But with specialized phone systems, computers, and software, these agencies are often more effective and cost-efficient in obtaining payments on delinquent accounts.

Pricing for services will vary on the volume of business you bring and the amount you need to have collected. You can usually expect to pay between 25 to 30 percent of the debt amount collected, although some agencies will charge up to 50 percent. You can also find attorneys who specialize in collecting unpaid debts for businesses.

An attorney may charge an hourly rate, retain a third of the amount recovered, or both. Unless you think you will need to take your customers to court for non-payment, you probably do not need to hire an attorney.

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