Credit Managers are looking for an agency that will get their invoices paid as quickly as possible for as little expense as possible. Aside from that they might be looking for the following:
1. Professional service – the Agency is still acting as an agent of the company
2. The Agent is compliant with all the applicable laws and all legislative acts so as to not put the company in a precarious position of liability
3. The Agent is licensed, bonded and insured
4. The Agent has staff with industry specific collection experience – A Credit Manager would be much more comfortable that an account is dealt with properly knowing there is prior knowledge of the industry
5. The Credit Manager needs to know how the Agency instructs their staff regarding collections – are they aggressive; do they only make 1 call a week and move on with or without an answer; do they only send demand letters and quit after there is no contact; do they play the “numbers game” or do they provide more of a service to their customer; do they treat a small account with the same effort as a large account
6. The Agent has proper geographic coverage the company requires
7. The fee is competitive as uncomplicated as possible – a sliding scale can be confusing and all a Credit Manager wants to know is, what the cost is at the end of the day, for submitting the file. A Credit Manager would also want the ability to negotiate a “Special” fee for unusually large accounts that may be submitted
8. Agent invoices and/or issues customer payments to the company on a regular basis. The Credit Manager usually must code the collection costs back to the original Cost of Goods Sold (the original G/L) to where the original charge came from so it’s important to understand how the invoicing needs to be done. The longer the Agency holds a customer’s payment, the longer the Credit Manger is without their money
9. Ease of retrieving information on an account submitted for collections – how can they review the accounts submitted to the Agent. What is optimal to some Credit Managers is to be able to review the work done online – they may also be able to enter new information they have received and need to give to the collector assigned. It is difficult to work via phone sometimes due to time constraints and being on the phone – it can often be days before you can connect to each other and it might be too late dependant on the information
10. How and when the Agency determines when to recommend placing and account with a Collection Agency – it is important to retain a Collection Agency that has the same mind set as you do. An experienced Credit Manager will want to retain an Agent that will do the best thing for their customers and not for themselves. The Credit Manager will want to be assured that the Agency is acting in their best interests and that includes the issuance of accounts
11. How and when the Agency determines when to recommend placing an account into Legal status. An Agent should not waste time and effort on collections when they know from researching the company there is no chance of payment forthcoming. The Agent should identify this issue with the Creditor as soon as possible for the Creditor to make the decision of Legal or Write off
12. Every Credit Manager might want something tailored to them when issuing an account. Every Credit Manager will say they are busy BUT they still need to report to their superiors what is happening on an account. It is sufficient at the initial placement of an account to the Agency, to indicate to their superiors that an account is “Placed for Collections” but after a while, a review needs to be done to decide whether the account is collectible or if the account is to be written off and a decision made regarding how any future recovery would be recorded. The Company Policy should define this but it may not. It is important for the Collections Agency to be upfront and timely with their findings regarding the account submitted for collections
a. What is the likely hood of getting any payment if not the payment in full including any historical collections/legal’s and their outcomes
b. If an account is uncollectible by Collection means, offer another possible avenue to collect the funds (Civil Claims or Court of Queen’s Bench) and the potential cost to your customer if they decide to go that route. It can be the case that a Collections Agent has a legal person on staff/retainer to do Civil Claims which is less costly than the Company would pay having to hire their own lawyer.
c. Decide how long the Agency keeps the account active and what happens if they close the account
i. If an account is closed with the Agency, what shows on the customer’s credit bureau and how does that affect them
d. How does the customer want to handle potential disputes the Agency uncovers
13. Does the Agency belong to any Credit Associations? Some Credit Managers may find this important and others may not be interested. An affiliation with a Credit or any other Association indicates the Agent is either becoming or is well established in the community where they are located. This can make a Credit Manager comfortable in knowing the Agent has some longevity and investment in the community and their actual existence
14. Does the Agency have any references? A Credit Manager is more apt to retain an Agency’s services if their industry peers have had success with them.
It is important to remember that a Credit Manager uses outside sources to make their lives easier, not more difficult. They don’t want to have to work out a calculation at the beginning or the end of the issuance of a file to the Agent.