If interest and\or attorney fees are collected, that should be reported to you, and unless otherwise negotiated, the agency should take only their usual fee on those amounts collected. Some agencies keep it all!
The agency should choose only quality, certified attorneys, negotiate the best rate for you, and provide timely reports about their activities. Unless a claim is for less than RM2,000, or there are special circumstances (such as a dispute), the attorney’s non-contingent suit fee should not be for more than five percent of the claim. When a legal file is closed, the agency should account for all advanced court costs.
Remittances should be sent to you no later than three weeks after receipt of a payment that clears the bank. Collections via certified funds or from attorneys should be remitted within one week of receipt.
It is very important to keep a close eye on accounts on which legal action is taken. Scrutinize the amount of fees paid. Sometimes an agency will keep some of the fees or costs advanced or will ask for additional fees when it knows an attorney is about to collect the account. Some otherwise reputable agencies do such things so that they can make more money or make up for giving lower fees to get the business. You can’t buy a Cadillac for the price of a Chevrolet.
From written reports, you should be able to track the following: how well the agency does on obtaining promissory notes and personal guarantees; postdated checks; complete information enabling proper decisions; and resolution of disputes without legal action.
An agency should also be able to give you sound advice on complicated matters, provide seminars or training to help tour credit\collection departments do a better job, and give specific advice on how you can save money on collections.
If you are a large user of agencies, you should consider visiting those agencies. Meet the staff to see if they are the type of people you want to represent your company. Review the agencies written collection standards. Look at the trust account. Check out the agency’s software and hardware. All of this checking out and visiting is important because a collection agency acts as your agent. As a result, any action the agency takes is a reflection on your company. Many clients have been sued because of their collection agency’s actions. You are also putting that agency in charge of a lot of your money.