Is The Consumer Finance Bureau Becoming Draconian Like In Its Attempts To Audit And Control Collection Firms?

The Consumer Financial Protection Bureau is in charge of overseeing banking practices so that consumers are protected from abusive tactics.  It was created in 2010 as one of the parts of the 2010 Consumer Protection Act, and while most people will agree that the consumer must be protected against abuses it needs to be asked if the bureau is actually overreaching in an attempt to audit collection agencies.

Last January 2013, CFPB declared that any party with greater than $10 million in annual revenue from consumer debt collection activities will be subject to the Bureau's audit. The 3 major categories of debt collection included under the rule are:  (1) firms that buy defaulted debt and collect the proceeds for themselves; (2) firms that charge fees for collecting defaulted debt owned by another company; and (3) debt collection attorneys that collect through litigation.  This is the first time that the federal government will supervise collection attorneys.  Because of this, the CFPB will start overseeing about 175 debt collection agencies, representing more than half of the debt collection industry's annual receipts.

Why Collection Firms Are Targeted

Collection agencies and firms seem to be targeted a lot more because it is up to consumers to complain about practices.  Since no one likes to be called about a payment (even when they know they owe the money), it is more likely that they will complain to the Consumer Financial Protection Bureau.  That means that the more complaints, even when they are not justified, make it more likely that a firm will be paid closer attention to.

Is It Fair?

While there are some collection agencies which have made mistakes and in some cases even overstep the things they can and cannot do, most firms are responsible in their practices.  Collection firm owners and workers will be happy to see an abusive firm go off the market, but unfortunately a lot of the good players in the industry are also suffering the consequences.  Some will be happy to make the industry look bad which means the firms have to pay a fine plus legal fees even when the complaint seems to be a little unjustified.

What Firms Can Do

The one thing that the best firms have been doing is to ensure that their personnel have the latest in training so that they can stay updated with the latest changes in the industry.  The bureau can propose changes in the laws at any time and if adopted the firm must comply from day one.  

Fast And Easy Ways A Debt Collection Agency Can Help Your Business

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An active debtor is a drain on your business and can severely cripple your company’s bottom line. By hiring a collection agency, you can get that money back working for you in a positive way. Here are some fast and easy ways a debt collection agency can help your business save money and stress.

Payment Methods

A debt collection agency can save you money directly because you only pay money from the debts collected. This is much more cost effective than keeping an in-house collection management department, and helps ensure that the debt is collected as quickly and easily as possible. To ensure satisfaction, if the debt collection agency cannot get your money back, you do not pay anything. When the debt is settled, a collection professional takes the fees out of the recovered money, saving you out-of-pocket expenses.

Time And Energy

The best way to excel is to stay focused on the progression of your business and make things happen. An active debtor can make moving forward difficult. By hiring a debt collection agency, you can save yourself the time and energy it takes to manage customer’s debts.  You are also likely to receive your money much sooner than if you were to do it yourself or hire an in-house debt management team.

You are also much less likely to receive a court summons when using a debt collection agency, which can be an additional drain on your time and bank account. A debt collection professional will avoid this as much as possible, by contacting the customer by phone. They also help you to retain customers after the debt is settled, by being as professional and courteous as possible.

One of the best and fastest ways to get your business back on track, and moving your focus back to the core elements of your company, is to hire a debt collection agency.

Three Ways To Know When Your Business May Need A Debt Collection Agency

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Are you having a difficult time getting a particular customer to pay what he owes to your business, and you or your internal credit department cannot handle it? This is just one of the many situations when your business needs to hire a debt collection attorney. Here are a few other ways to tell when your business should contact a debt collection agency to get back your lost profits and improve your bottom line.

If Your Business is Not Equipped To Handle Debt Collection

Some, especially small companies, simply are not equipped with the manpower to handle long term debt collection. A debt collection specialist can spend whatever time is necessary to handle a past-due account or debtor.

If You Are Losing Out On the Bottom Line

If too many of your customers are failing to pay the amount they are due, you could be losing out on those valuable funds that can help your business to grow. If your bottom line is being significantly diminished or you are having a hard time making ends meet with debts active, it is definitely time to hire a debt collection agency.

If You Are Paying More To Deal With Debtors Then The Debts Cost

If you are employing an internal debt collection system, you may be paying much more than the amount of money, time or resources that the debts are equivalent to. This can affect the health of your business’ growth and stability, and damage the survivability of your business in the long term. A debt collection agency only takes money out of amount collected, rather than paying directly out of your pocket. This can save you quite a bit of your hard earned money. 

Four Tricks To Selecting The Best Debt Collection Agency For Your Business

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There are many great debt collection agencies that can help your business save the bottom line, and get you the money you are owed. But there are also many debt collection agencies that will not fulfill your company's needs, so here are four tips to help you choose the right debt collection agency for your business.

The Agencies Reputation

As with most of the hard decisions for your company, word of mouth information can be the best way to tell whether or not a debt collection agency will be right for you. There are also many listing websites that can tell you what the highest rated agencies are and some testimonials on how the agency has helped other businesses.

Industry of Collection

Different debt collection agencies specialize in different industries. Making sure that you choose a debt collection professional that is familiar with the industry that your company is in will help you choose a debt collection agency that is right for you.

Timely Remittance

Make sure that the debt collection agency that you choose has a timely remittance policy, so you can ensure you will get your money and get it back to work for you, as swiftly as possible. Some debt collection agencies can hold your money for a long period of time, so this is also very important to check.

Cost Effectiveness

Budgeting a total cost to loss ratio when choosing a debt collection agency is an important consideration. Make sure you are not paying more than you would be collecting from potential debtors. The idea here is to improve your bottom line, and if you are paying for more than you need, you are wasting money on a useless service. Many good companies will grade the costs of their services to your needs. 

What Are Some Signs It's Time To Hire A Debt Collection Agency?

Benefits Of Debt Collection Agency Instead Of A Internal Credit Control Department

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An internal credit control department for your business may initially seem like the best option to collect on debts, but this can be more of a hassle than you originally anticipated. Usually a single business does not have the tax supported pull, or the experience to effectively control those who are indebted to your company.

Some Things An Internal Credit Company Can Lack

While it may seem like a great idea to take the financial issues of your business into your own hands, you may actually be losing money by choosing an internal credit control department. This is because there are a lot of ways these companies have learned to deal with potential, and active debtors that you or your small business employees have not learned or are not equipped to handle. This lack of fiscal returns can seriously damage the growth of your business and cripple a budding company.

Depending on the amount of debt collection that you need, hiring a debt collection agency can actually save you money right off of the top. This is because collection agencies take money from the amount that is collected, rather than being paid based on a salary or other direct method. This medium also allows for greater reliability with a debt collection lawyer, because he does not get paid if you do not. This money you have saved can contribute to the growth of your business and increase your bottom line.

A debt collection attorney can also save relationships between you and your customers, even while collecting the owed funds. This can be a difficult task for internal credit control departments to manage. A good agency can even give your business some additional pull with a customer, especially in the instance of friendly and succinct debt collection.