How to Know When It’s Time to Hire a Collection Agency


Regardless of how well you check the credit standards of clients, you may still experience issues with nonpayment. When this happens, you can choose from three options. First, you can cut your losses with that client and stop doing future business with them. Second, you can collect the debt yourself, which may involve the company’s owner locating a debtor and making collection calls if the company doesn’t have a credit department. Or you can choose to hire a collection agency.

It may seem like a difficult decision to send a client’s account to collections, but the sooner an agency can begin working on collecting a debt, the sooner you will get paid. There are many reasons to send a debt to collections, but below we’ve laid out a few tips to help you decide when to turn an account over and hire a debt collector.

When Should You Hire a Collection Agency?

You may not know when it’s time to hire a collection agency, but these tips should help you decide.

  • You can’t locate the customer.
    If the phone number and address you have for the customer are incorrect and you can’t find the customer, it’s time to hire a collection agency. If you hire a debt collector, they can track down debtors for you. Debt collection services not only are trained to find non-paying clients, but they also have a wide range of tools at their disposal that assists them in the process.
  • The debt is over 90 days past due.
    It’s probably time to hire a collection agency if the debt is over 90 days old. Even a collection agency has a lower chance of collecting the funds; however, in-house collection departments and business owners have less success. Thankfully, even at 90 days old and beyond, debt collection agencies may still be able to retrieve the monies owed to your business.
  • Customers’ checks have bounced.
    It may be time to hire a collection agency if you have customers who have paid by check, but those checks were returned. This is particularly true if a customer has sent more than one check, all of which have bounced, which signifies that the customer may have no intention of paying. Debt collectors understand how to handle such clients and what steps to take to get them to pay.
  • Customers keep stalling.
    If you’re able to reach the client on the phone, but they put you off by asking to call back later, they may not intend to pay at all. If the customer never actually returns your call, they most certainly avoid discussing the debt and probably will not pay it without apparent pressure from a debt collection agency.
  • Customers promise to pay by a specific date but then don’t pay.
    They know that they won’t hear from you again before that date by making a promise with a particular date. The debtor may repeatedly attempt this stall tactic in an attempt to keep you waiting for a payment that may never come. Contacting a debt collector will help ensure that you receive the amount due since the older an unpaid bill gets, the more difficult it is to collect.
    It may be challenging to decide to hire a debt collector, but these tips should help you determine if it’s time for your business to accept the help of a professional.

What Should I Look for When Hiring a Collection Agency?

hiring debt collector tipsWhen considering hiring a debt collector, consider these four tips to pick the right debt collector.

  1. A Debt Collector That Works With You
    You’ll want to find a debt collection agency that will be your partner and work with your business to collect debts while maintaining your clients.
  2. Excellent Customer Service
    While debt collectors used to have a bad reputation, today, the field is filled with friendly, helpful associates who work with you and your clients, creating individualized payment plans and accepting various payment methods.
  3. Return on Investment
    Don’t look only at the percentage charged by the debt collector, but rather consider the ones that can collect the most money owed.
  4. Reviews and Referrals
    Find out what others think of the collection agency, including online reviews, the Chamber of Commerce, and the Better Business Bureau.

When thinking about hiring a collection agency, you should review these points and take each into account to find a debt collector that is right for your business.

Benefits of Hiring a Collection Agency

Small business owners typically do not have the time to locate and call customers with past-due invoices. Some companies use an internal collection department to mitigate such issues, but often, debt collecting can become overwhelming or ineffective. There are numerous benefits to hiring a collection agency to handle your delinquent accounts.

Legal Protection

Unless you are deeply familiar with the Debt Collection Practices Act, you might want to trust the expertise of a professional debt recovery service. Debt collection agencies know federal and state laws regarding collection practices and can be trusted to handle accounts appropriately without legal consequences.


The paperwork involved in tracking down and contacting a debtor may be staggering. If you choose to sue the debtor to retrieve the funds owed, you will need complete documentation of all attempts made to collect the monies. A collection agency documents and records the entire process in a suitable method to the IRS’s requirements.

Successful Debt Collection

Collecting a debt can be a complex process, mainly when debtors ignore or avoid your attempts at contacting them. Collection agencies are skilled at reaching out and have a higher success rate than in-house collection departments. Hiring a debt collection agency can increase your chances of collecting money while allowing you to focus on running your business.

Faster Payment

People tend to pay faster when approached by a debt collector. This may be because they realize that their credit score could be affected if they don’t pay. To prevent a drop in their credit rating, debtors tend to respond immediately when approached by a collection agency.

We Can Help

As a business owner, you understand the importance of cash flow in the success of your business. When clients don’t pay, it interferes with this process and can seriously affect your company’s profits. While you may think it’s time to take legal action, don’t call a law firm just yet. Instead, it may be time to hire a collection agency like MCA. If your attempts to collect debts have proven unsuccessful, we can help.