Frequently Asked Questions - Part 1

Commercial Investigations Inc. gets many questions about the business of collection agencies. For those interested, here are some of the most frequently asked questions about collection agencies that we hope will help you understand collection agencies and the process of debt collection.

These questions and answers are geared towards people wishing to utilize the services of a collection agency.

How much will it cost?
Cost varies depending on the collection agency you decide to use. Some collection agencies will buy the rights to the debt, but not for the full balance. They will in turn seek to collect the debt for the full amount. Other agencies will collect on a contingency basis. This means they will charge a percentage of the total amount collected. In the event they do not collect, there will be no fee, and usually will offer other options including litigation. The percentage usually ranges from 25%-50%, depending on the nature of the past due account. The older an account is, the harder it is to collect. Accounts under a certain amount will usually see a higher percentage, while large past due accounts will see lower percentage rates.

When can I submit an account to a collection agency?
You can submit a past due account to a collection agency at any time. Most businesses wait until they have exhausted their own arsenal in the attempt to collect on the debt. Though, it is good to keep in mind that the longer an account is past due, the harder and less likely it will be that anyone can collect on it. For more information about when to submit an account, read Commercial Investigations Inc. guide. And for more information on improving in-house collections, click here.

How long does it take to collect?
The length it takes to collect on a past due account varies depending on the nature of the past due account. The longer an account has been past due, the more time it will take in order to collect on the past due debt. The type of debtor will also have an effect on how long it will take to collect. Some debtors may be experiencing hardships, and will pay when they are able to. Other debtors may dispute the debt, and thus much more investigation is needed in order to collect. More serious cases that will take much more time are when litigation is needed, where the debtor must be taken to court in order to see the debt paid off.

What kind of accounts can I submit?
Different collection agencies will handle different kinds of accounts. It is a good idea to contact the collection agency beforehand and make sure they will be able to handle your kind of account. It is also a good idea at this time to make sure the collection agency understands your business’ industry, so they will fully understand the kind of debt you have. Full service collection agencies, such as Commercial Investigations Inc. will handle almost, if not all, kinds of past due accounts you might come across.