Receivable/Accounts - Information for Credit and Collection Issues

Friday, August 21, 2015

Letting Your Collection Agency Go


It happens now and then – a creditor won’t have a good fit or set of results from a collection agency, and it’s time to wind things down and work with a new partner.  However, disentangling from an agency that has spent months, if not years, working with you can create some logistics you need to cover before shaking hands and walking away.


Are You Sure It’s Time To Say Goodbye?

Obviously, in the collections industry everyone is vying for your business, and these competitors will be telling you to fire your existing agency and give them a try – but should you?  Before ending a business relationship that’s got history, and financially benefits your company’s bottom line, you should ask if the liquidation you are getting is reasonable, is the commission rate you are being offered realistic, and is a change good for your company’s interests at this time?

If you are 100% sure that you could do better with a new partner, move ahead – but if you have doubts, maybe it’s better to try a test sampling with a new collection vendor, and try 100-1000 accounts to measure recovery performance, as well as operational flow, communications, and consumer complaints.  And at the same time, you can let your incumbent agency know you are testing a competitor, because you have concerns or are measuring their performance.

To start off ending things, you should be as professional as possible, and have an honest conversation with your existing agency, and let them know you are moving on, but at the same time put it in writing and create a paper trail.  Make a clear set of end dates for the following items below.


Stopping the Forward Flow

Redirecting new accounts to a new vendor is pretty simple – make sure the old agency and new agency know the switch date, and make sure it honours your contract terms with both agencies.

If you are in an industry with multiple accounts for the same consumer or consumer household, be prepared for some issues as consumers are being contacted by more than one agency – have a plan in place to shut down conflicting accounts on a case by case basis, or tell both agencies to redirect these confused consumers directly to yourself.


Handling Existing Inventory

Your old agency may have accumulated a significant inventory of your files – you can mutually agree to close down the accounts wholesale, or allow them to maintain a small number of pre-authorized payments or payment arrangement files.  Make sure you are clear with a shut down date for all accounts, and get a report from the agency showing the accounts as closed.

Also, if the agency is in possession of original data, you may want them to return or destroy that data – to a point.  The agency shouldn’t delete any record of the debtor ever existing with them - keep in mind that consumers may call this agency years later because of a credit bureau inquiry or a judgment and want to deal with the account.  Make sure you leave the agency enough information to identify the account, and forward the consumer back to you to deal with.


External Entanglements

As you have given the files to your old agency, they in turn may have reported these accounts to the credit bureau.  Be clear with the agency with a deadline for showing with the credit bureau these accounts are closed (it’s a special status they can upload).

As well, if you have your company name on testimonial sheets, the old agency’s website, or anything you might not be comfortable with, make sure you politely ask those to be purged and give them a reasonable amount of time to do that.


Ending Things Well

If you have been reasonable with your old agency, and avoided information ambushes or emotional words, you can probably end things well – and that’s a good thing.  Your new agency may not be the better option, or the key contacts you used to deal with may move on to a new agency, or you will end up working at a new company and be back to dealing with your old agency under a different brand – there’s fair odds you will deal with some of these same folks in the future.  The credit professionals’ world is small, and odds are you will run into each other down the road, so make sure you can end things like you began, with honesty and a hand shake.  This leaves the door open for new opportunities and changes in future.


Conclusion

From my agency’s internal perspective, we see a lot of clients coming on struggle to end things well with old agencies.  Some don’t know how to properly express their dissatisfaction, and others don’t know what to ask or instruct their old agency as is their right.  Some agencies are bad sports about letting a client go, even though no one is winning through the partnership.  So, if you are a credit manager, and you want some insight into letting your collection agency go, and you are having issues, feel  free to give me a call or email me.

Thanks kindly,
Blair DeMarco-Wettlaufer
KINGSTON Data & Credit
Brantford, Ontario
226-946-1730