Debt Collection 411s: Resources For Small Businesses

Any business that extends credit to its customers can find itself with bad debt on the books.  When this happens there are two basic approaches to recovering that debt: An inside collection department, or hiring third-party collection agencies.  While both approaches have their advantages, most small businesses lack the funds and staff to make debt collection a priority or a success, and most opt to hire collection law firms or collection agencies to assist in their debt recovery efforts.

That leads to the challenge of choosing the right collection agency for your business.  A little due diligence will go a long way towards partnering with the right agency.  Agencies typically offer two tracks of collection: Either on a contingency basis, claiming a percentage of the debt owed when it is repaid, or on a flat-fee basis per account serviced.  Luckily, there are several resources available to small businesses that can help them locate and identify the right collections partner for them.

Collection Agencies Resources

• The Association of Credit Collection Professionals International (www.acainternational.org).  The ACAI was founded in 1939 and counts about 5,000 members worldwide.  They codify ethical standards and certify collection professionals.  This is an excellent place to start because you’re guaranteed to find only legitimate and above-board collection agencies.

• The California Association of Collectors (www.calcollectors.net).  The CAC is a California-based organization similar to the ACAI.  Found in 1917, it was the first such organization in the United States.

•  insideARM (www.insidearm.com).  Acts as a clearing house for information and discussion for accounts-receivable professionals.  While not specifically geared towards listing and contacting collection agencies, the web site is a great place to read about issue connected to debt collection, and engage with professionals across the country who are treasure troves of experience and networking.

• There are also a plethora of blogs written by collections insiders, such as Michelle Dunn’s Credit and Collections Blog (www.credit-and-collections.com).  These blogs are packed with shared experiences and strategies for any small business saddled with unrecoverable debt.