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Commercial Collection Services - Selection of a Service

Before selecting a collection service, a creditor should review certain essential factors. There will be a financial relationship between you and the collector, and the collector has ethical and legal responsibilities. The credit grantor should:

• Investigate the commercial service’s financial responsibility and position in the community. 
• Check on the bonding and licensing of the service, particularly if required by state law. The International Association of Commercial Collectors (IACC) requires that its members be bonded. 
• Be sure the service is aware of federal and state collection laws and follows good business practices. IACC members have access to individual collector and agency certification programs. Certification assures clients of the knowledge and professionalism of the agency’s service. 
• Determine the relationship of the service with its peers or competitors. IACC sets the highest standards for its members and demands strict compliance with its rules of conduct and its code of ethics. 
• Know how the service approaches the customer. An effective service will understand the client’s credit and public relations policies and provide a collection approach that compliments these policies. 
• Learn the geographic or trade strength of the service. Find out first-hand what area it covers and if it has access to fellow collectors throughout your market area in order to give your claims on-the-spot coverage. 
• Find out how far the service will proceed on typical cases. Learn how it recommends continuation with attorneys and forwarders, if this is necessary. 
• Determine how fees are charged and obtain a schedule in writing. A collection service often uses a written agreement which establishes the relationship with the client, but it works on a contingent fee basis. Be sure that special situations are understood in advance. 

Reports
Fully understand the service’s reporting practices and policies for money remittance. You know you have made a wise choice of a collector by the type of report you receive. You want to know if a payment has been made and that a check is forthcoming. You are interested in the collection potential from the debtor and the recommendations of the collector. 

Reports are essential to the credit manager as you have an obligation to keep others informed, namely the controller, the treasurer, the vice president of sales, the president and the stock holders. The decision of a creditor company to borrow or to liquidate its assets may hinge on the collectibility of overdue accounts. It may also be a crucial factor in the sales department’s proposals for growth. Modern business conditions require that management be aware of accounts receivable liquidity. 

Specify when reports are required. A good collection service will tailor its reports to meet your schedules, if possible. Know what types of reports will be used—check-list forms with added comments or special reports which give information of special value. For example, if the debtor moves or changes its trade style or accepts new people into its business, this information is valuable to you. 

Select a collection service as you would any other firm with which you have business relationships—by reputation and by performance. You will find members of the International Association of Commercial Collectors, Inc. highly qualified in both areas.

Communicate with Your Collector
Once you have selected a collection service, communicate effectively with its staff. This creates rapport, confidence and understanding. It encourages cooperation which results in prompt collections. Supply the service with all background information, ledger experience, debtor’s business organization and information on the principals. This gives the collector an informed approach to the debtor, thereby enabling him to do a better job for you.

Professional Services Pay
The annual cost of complete professional collection services is a fraction of the money that would otherwise have gone uncollected. Yet for these costs, the credit manager has at his or her disposal a fully staffed and professionally trained collection service organization. For its positive results, hiring a collection service is a recognized, accepted and legitimate business expense. Most credit executives realize this fact as a necessary check to substantiate accounting procedures for write-off and tax procedures as well as recovery. Members of the International Association of Commercial Collectors, Inc. recover millions of dollars annually for their clients. They can give valuable assistance to your credit department in controlling mounting delinquencies and credit losses.

What is IACC?
The International Association of Commercial Collectors, Inc. (IACC) is an international trade association made up of more than 200 commercial collection agencies and 150 commercial collection attorneys. IACC is the largest organization of commercial collectors in the world. In addition to serving nearly every major U.S. metropolitan area, IACC members also serve thousands of smaller communities. For 30 years, members of IACC have successfully collected past due commercial accounts for manufacturers, processors, wholesalers, distributors and many other industries. IACC members have the qualifications, training, experience and resources to effectively handle commercial claims for any field, anywhere in the world. In addition, the national and international network of IACC members assures quality coverage of accounts when claims are forwarded.

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