Commercial Collections Blog

Why Choosing the Right Collection Agency is Important

Choosing A Collection Agency


A collection agency can help you recoup any payments that were not paid to your company, but finding the right one is like finding a needle in a haystack.  There are many collection agencies available, but you need to make sure you find one that is accredited and has plenty of integrity.  There have been instances where collection agencies have gone to illegal lengths to procure payments from people, and in these cases, the collection agency has been fined.  If you’re a small business owner, you want to make sure you’re dealing with a collection agency that shows integrity, respect, and character.

What Happens to Unreliable Collection Agencies

Earlier this year, a collection agency called Commercial Recovery Systems, Inc. was branded a $2 million penalty against the president, Timothy Ford.  This fine was implemented due to the agency using false threats against debtors with lawsuits, and other measures.  This order was issued by a Texas federal judge, which shows the seriousness of the crime committed by the agency.  This act of offending the FDCPA proves that collection agencies that break the law are going to be punished harshly.

Not only was the fine instituted, but the company and President Timothy Ford were banned from working the debt collection business permanently.  The illegal practices by the company show how a terrible collection agency can affect small business owners trying to collect a debt.  While the small business owner doesn’t have to pay the fine imposed by the law, it still affects them because they have to pay more money and divert more resources to finding a new collection agency.  While it is not common for collection agencies to use unethical tactics, the chances of getting caught, and the punishments doled out, can be enough to scare any business owner away.

Choosing a Collection: How to Find the Right One

When it comes to choosing a collection agency, you want to make sure you find the right one for your company.  Here are some tips you can use to help you avoid any pitfalls from hiring the wrong collection agency.

  • Conduct Research on Different Agencies
    • Collection agencies can specialize in various types of collections, and knowing which one you need, will help you choose the right one. If you’re a small business owner, you should find out who you are trying to collect from and find a collection agency that specializes in that field.
  • Verify the Legitimacy of the Agency
    • After you’ve done your research and made a short list, you should start verifying their legitimacy. Different laws can affect what a collection agency can and cannot do.  To ensure you’re hiring a collection service that is legitimate, they should be bonded, licensed, and adheres to the rules of the FDCPA that is the Fair Debt Collection Practices Act.  If they are legitimate, they should have no problem showing you the information on their company.
  • Check if The Agency Uses “Skip ”
    • Trying to recoup a debt can be difficult, especially if the debtor moves out of state. Luckily, “skip tracing” can help a collection agency find a debtor, even if they don’t have a forwarding address.  Not all collection agencies have skip tracing, so you should find out beforehand whether they use it or not.
  • Ask if the Agency has Insurance
    • Insurance is imperative to choose the right collection agency because if the debtor sues the collection agency, you can be brought to court for hiring the collection agency. A good collection agency should have insurance called, “Errors and Omissions Insurance,” and it will cover both of you in the instance you’re brought to court.
  • Compare Costs
    • There are different ways a collection agency will take payment, and they provide a flat-fee or contingency option. A flat fee is offered early in the negotiation process and is used for small processes.  Contingency fees are based on repayment by the debtor, and prices can range from 25-45 percent of the total amount of the collection.  If the agency cannot procure a payment from the debtor, then no payment will be made to the collection agency.


When it comes to collecting debt, getting payment for services can be a hassle, especially if you cannot get in contact with a debtor.  While collection agencies can be beneficial, if you’re a small business owner, you should be careful on which collection you choose. Let’s say that you are a local business owner or in charge of your company’s A/R, look for a local Collection Agency like  Burt and Associates. We are part of the ACA International, ensuring that we won’t use shady tactics to procure payment.  Our company will work for your business to ensure payment is received from lawful means, and we are competent in our work.

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