Benefits of Using a Pre-Collect Program
Generally speaking, collection agencies have a couple of ways that they structure fees for collecting on past due receivables. They will charge a fee up front for their services, this may be a letter series, or just one letter depending on the price point. Or they will charge you on the back end, by a contingency fee. Both of these pricing structures have some pro's and con's. The trick is to determine which service works well for your organization.
Accounts that have not been worked in-house by a credit department, and are of larger balances, definetly can benefit from a pre-collect letter service. If you are using a collection agency now paying contingency rates, and finding that the majority of your accounts are being collected within the first thirty days, it would be a good idea to talk to your repersentative about trying a pre-collect program. This could save hundereds of dollars being spent in contingency fees. You may also try to find a common denominator on the quick paying accounts and enroll them in a pre-collect program.
The benefits of a pre-collect program are as follow:
Cheap, you can pay anywhere from 5-20.00 to get your accounts collected.
Soft collection, a letter, or a letter series of your choosing. No phone interaction between your client and a collection agency.
Control, all monies are directed back to your office, not the agency.