Selecting a Collection
Agency in Canada

15 Reasons to Use Priority Credit

Collection Comparisons in Canada vs USA

Choosing a professional Canadian collection agency or collection service to manage your delinquent accounts and other related tasks can be a wise decision, but where do you start? You want an agency that will represent your organization in a responsible and professional manner that provides a satisfactory rate of recovery while maintaining your public image. The decision involves more than just giving business to the lowest bidder - it requires careful consideration.

Getting the most from your collection agency requires cooperation and strong communication. The following are some key issues that can help businesses determine the quality of an agency and help increase success.

Key Points to Consider when selecting a Canadian collection agency or US collection agency:

1. Capabilities
What can the agency do for you? Collection agencies use experience and resources to provide professional accounts receivable management services for numerous industries. Agencies can offer skip tracing services to locate consumers when they can no longer be reached at the address or telephone numbers listed on the accounts.

Many also have the ability to forward accounts to other agencies if a consumer has relocated. You should consider the types of technology the agencies are using and how your technology might interface to allow for the electronic transfer of data and information.

In addition, some agencies provide billing services, including coding, processing, printing and mailing, while others offer business administration and accounting services. Sometimes an agency provides pre-collect services, where collectors start working an account before it becomes past due. Other service agencies provide consulting, telemarketing, campaign calling, reminder and follow-up appointment calls and temporary office administration.

2. Market Knowledge
Make sure the agency has the skills and knowledge needed to successfully collect on your particular type of account. For example, collectors working in commercial collections must be familiar with corporate terminology and indemnities, while collectors working consumer debt collections need to demonstrate knowledge of the regulatory framework devised by the various provinces, the lender/guarantor relationship and bankruptcy rules related to the collection of consumer debt.

It's important for agencies and credit managers to be aware that each collection market needs to be handled differently.

3. Recovery
Discuss recovery percentages and rates. The percentage rate of commission may be less important than the agency's percentage of return on the total dollars you refer for collection.

For example, if you turn over $1,000 worth of accounts at a 25% commission rate and the collector recovers only $300, you will receive $225 from these "bad debts." If you refer $1,000 at a 35% commission rate, but the collector recovers $500, you will receive $325. Even though the commission rate is higher, your profit would be greater in the second example because the agency's recovery rate is higher. Remember that the commission rate by itself is meaningless - net return is the key.

4. Procedures and Policies
Investigate the procedures an agency uses to collect, including when it begins working an account, the collection letters it uses and whether it has trained employees. Become familiar with the agency's policies and standards.

Compliance with the Consumer Protection laws and other legislation, regulating the collection industry, is critical to third-party debt collection agencies. Inquire about the policies and practices the agency has in place to facilitate compliance.

5. References
Another step in selecting a reputable agency is checking references. Try to contact at least two creditors in your industry currently using the agency's services. Find out if the arrangement is successful and how satisfied clients have been with the services they've received. Also, try to determine if the agency has a good reputation in the community by contacting other credit grantors or local Chamber of Commerce.

6. Professional Credentials
Make sure the agency complies with all provincial/state licensing and bonding laws, if applicable. Experience is often a good indication of quality. Also, determine if the agency holds membership in national trade associations such as ACA International, the Association of Credit and Collection Professionals (ACA) or the The International Association of Commercial Collection Agencies. Members of ACA & IACC agree to comply with all federal and provincial/state laws and regulations, as well as the ethical standards and guidelines established by each association.

7. Training and Development
Ask if the agency's employees receive on-going training and education. ACA & IACC members have access to educational materials and seminars covering all aspects of collections. Although these opportunities are voluntary, participation indicates that the agency is responsible and recognizes the importance of professional, competent employees.

8. Insurance
The purchasing of Errors and Omissions Liability Insurance (E & O) can also be an indicator of a conscientious agency. This insurance often extends coverage to the credit grantor as well as the agency. This is important because creditors can face litigation as a result of alleged violations by their collection agency. Look for coverage on claims brought by consumers for wrongful acts such as libel, slander, wrongful eviction, and wrongful entry, and harassment, invasion of privacy or interference with business. E&O Insurance should specifically cover violations of Consumer Protection laws. Clients of ACA members can request to see an insurance certificate or validation of Errors and Omissions Liability Insurance.

The above suggestions are important to consider when selecting an agency. Competition among collection services is good for you as the client. This competition contributes to a more professional and efficient industry. By carefully evaluating your company's needs, as well as the capabilities of the collection services available, you can maximize your accounts receivable income and ensure that your customers are handled properly. Careful selection of a third-party collection agency strengthens your bottom line and helps you retain customers, leading to a more profitable business.

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In the Northwest Territories a collection agency is permitted to contact a debtor's employer once a year to confirm the debtor's employment, title, and business address. In British Columbia a collection agency is only permitted to contact a BC. Resident at his workplace: a) For the sole purpose of requesting the debtor's home address or home telephone number or both, if the collector does not already have this information b) On one occasion if the collector has been unsuccessful contacting the debtor at his residence or c) The debtor has consented to the collector communicating with him at his workplace In Alberta It is illegal for a collection agency to carry on business using any name other than the name under which it holds a collection agency license. A collector employed by a collection agency who claims to be calling from somewhere other than a collection agency is breaking the law. This includes a collector calling under the guise of a law firm, a creditor, or some government agency. In British Columbia when a debtor has notified a collector and the creditor that the debt is in dispute and the debtor wants the creditor to proceed with legal action, any further calls are illegal. When this situation occurs there are only 2 options-sue or close. In Saskatchewan a collection agency shall not commence or continue a lawsuit for the recovery of a debt in the name of a collection agent as plaintiff unless the collection agency has purchased the debt for valuable consideration and the debtor has received notice of the sale of his account.