Collection agencies have a bad reputation, and unfortunately, it’s a bit of an earned one. I say unfortunately because there are some fantastic commercial collection agencies out there who act very professionally and provide their clients with a great service. A few bad apples have tainted the public’s perception of the ARM (accounts receivable management) industry as a whole, and this causes a little apprehension when a company is trying to decide whether to enlist the help of a collection agency.
If you do your homework and partner with a good agency, a professional collector can do wonders for your business. In the mechanics lien context, enlisting some collections help when you run into a payment dead end can be the difference between getting the lien claim paid and not.
What A Collection Agency Can Do That You Can’t
Every business is a niche business in some sense of the term. If you’re a painter, you know painting. When a general contractor proposes to self-perform the work because it’s “easy,” or when a homeowner figures they will just do the painting themselves, it makes your blood boil. You know you can do a better job and that your service has value. You live it everyday.
Sometimes, we forget to see things in the same way when thinking about other services. Every service comes with a cost, but since the vendor you select focuses on that particular service, there is value in what they do simply because they know how to do it so well. That is the first point I want to make about why a collection agency can be great for your company.
Sure, you can make phone calls and send letters in-house, but you can’t do it the same way a collection agency will because the collection agency has irreplaceable experience in collecting accounts and has the ability to focus on providing this service to your account (your focus, remember, is on providing your particular service).
Here are some other things a collection agency can do that you can’t:
- Send letters and make phone calls as a collection agency, which alerts your debtor that you have escalated the debt;
- Be independent and distant from you – the creditor – which means a little more leverage in negotiating the debt payment;
- Report debts to credit reporting offices;
- Get Skip-Tracing reports on debtors and conduct other debtor research;
How To Collect On A Mechanics Lien
In the past, I’ve blogged about how effective a mechanics lien can be by just having it filed. As shown in Zlien’s survey of 2011 mechanics lien filings, for example, over 64% of lien claims are paid within 3 months of filing without any additional collection or legal work needed.